Indians are known for holding around 9-11% of the total physical gold available in the world. It is the second highest in the world. The reason for such high gold consumption is the Indian tradition of passing gold articles and ornaments through generations. Consequently, providing gold articles as collateral for raising loans is a convenient and cost-effective option.
Often gold loans are acquired without any research about interest rates. In such a situation, you may get trapped in a loan offered at a high interest rate. The easiest solution to tackle this problem is using the feature of gold loan transfer. A low rate of interest on gold loan results in budget-friendly EMIs, thus leading to a better valuation of your gold.
What is a Gold Loan Transfer?
Gold loan transfer involves a procedure of transferring your gold loan balance from your current lender to another. Poor customer care, lower gold valuation, etc. are reasons for opting for a gold loan takeover.
Usually, borrowers transfer their current gold loan balance from the old lender to the new one due to high interest rates or EMIs. Though gold loans are naturally short-term, the high-interest rate can result in heavy EMI amounts, increasing the financial burden on the borrower. Therefore, it is important to find ways to decrease the financial costs.
Benefits of Gold Loan Balance Transfer
There are various other benefits of a gold loan balance transfer –
> Low-Interest Rates: Gold loan takeover generally offers low interest on gold loans in comparison to the current lender, reducing the overall cost of the loan.
> Better Rate Per Gram: In most cases, institutions/lenders provide loans worth 75-90% of the gold kept as collateral. With the feature of gold loan balance transfer, borrowers get the option of switching to a lender that offers better value of the gold kept as collateral.
> Improved Features: Gold loan transfer offers other loan advantages like flexible loan repayment, low processing fees, convenient tenure, etc.
> Insurance Facility and Security: Gold loan transfers come to aid when borrowers are unhappy with the lender’s security arrangement of the gold kept as collateral.
Gold Loan Transfer Process
– If you wish to opt for the gold loan transfer process, follow the below-mentioned steps:
– Provide the new potential lender with your current loan pledge card.
– Once the details of the transfer procedure are ready, an analysis report of your saving pattern will be provided to you.
– Review the report and send approval.
– Once the report is reviewed, complete the KYC process to confirm the transfer process.
– The new lender will then send you a detailed description of your outstanding payments to the current lender. Ensure that you have paid all the interest debts before you initiate the gold loan transfer procedure.
– After all the outstanding payments are done, your gold loan takeover is transferred successfully to the new lender.
Documents Required for Gold Loan Balance Transfer
~ The documents required to complete the gold loan balance transfer process include the following:
~ Address Proof: Voter ID, Utility Bill, Passport, etc.
~ Signature Proof
Gold Loan Balance Transfer Charges
The charges levied during the gold loan takeover process depend upon the norms and policies of the current and new lending institution. However, the general costs of gold loan balance transfer include:
> Foreclosure Charges: Pre-closure or foreclosure charges are levied by the current lender to cover his loss of interest due to your early termination of the loan account. The % charge varies from institution to institution. It generally ranges from nil to 1%.
> Processing Fees: Processing Fees levied by lenders and banks range between 1% to 5% of the entire loan amount.
> Inspection Charges: The fees charged by the lender during the evaluation of gold kept as collateral is called inspection charges.
> Administration Charges: The amount charged during the loan application process is called administration charges. Administrative charges are non-refundable universally.
Conclusion
To sum up, gold loans are easily accessible and quickly procured. Gold articles or ornaments can be used as assets or collateral to instantly acquire financial assistance, especially in times of emergency. As gold loans are secured loans, lenders do not require much documentation which makes the application and disbursement procedure instant.
A gold loan involves minimal risks as the lender can recover the loan amount by selling off the gold kept as collateral in case of any default from the borrower’s side. Due to any reason, if you as a borrower are not happy with the lender and cannot repay the entire loan at the moment, the feature of gold loan balance transfer gives you the option to find and choose the best alternate lender.
Benefits like lower rate of interest, improved customer service, better loan conditions and increased LTV make gold loan balance transfer a good option to save up money for a better and more secure financial future.
