In addition, the structured gold loan industry continues to deliver on its promise of providing loan applicants with convenient financing options. With the rising demand for gold loans, it is estimated to reach INR 7,557 billion by FY2024. Gold loans are well-known for their simple terms and a plethora of perks for borrowers. Gold loan renewal is one of those options.
When the entire loan amount, as well as interest, has been paid to the lender, a gold loan renewal opportunity is available. An individual who already has a gold loan can take out new gold loans against the same gold valuables with the same lending institution.
For debtors in need of immediate financial assistance, gold loan renewal is a great solution. The same gold valuables or new ones can be pledged by the borrower.
Loan renewal vs loan extension
In the first place, a Gold loan renewal is not the same as a gold loan extension. Borrowers who want a gold loan extension ask the lending institution to extend the existing gold loan’s term.
Consider the case of a borrower who has a one-year gold loan liability that has not been paid in full at the end of the loan term. At the borrower’s request, the lender might prolong the gold loan payback period.
A gold loan renewal, on the other hand, refers to the continuation of an existing loan agreement with the lender. Depending on the borrower’s repayment history, the lender may be able to extend a gold loan at a lower gold loan interest rate.
Benefits of gold loan renewal
Pre-evaluated gold assets:
Gold goods are evaluated by professionals to determine their purity and determine their exact market price. Gold appraisal necessitates both human and technological skills. For lending institutions, it is a time-consuming task. To assess the fineness and precise worth of gold, they go through a rigorous process. Soldered gold jewelry and solid gold jewelry are valued differently. Time and money are saved by taking out a loan against pre-evaluated gold.
Familiarity with the loan terms:
Identically, a borrower is already familiar with the terms and circumstances of the existing gold commercial bank. The lender is also aware of the borrower’s ability to repay the loan. It assists borrowers in determining the loan amount and term. The lender can also rapidly decide on loan terms to provide the borrower.
Instant loan sanction:
The gold’s required documentation has already been sent to the lender. The gold purity test and document verification have both been completed. As a result, the renewal of a gold loan can be performed swiftly, and the loan can be sanctioned and disbursed on the same day.
The advantage of an existing relationship with the lender:
If borrowers can maintain a positive relationship with their lenders, they will have more negotiation power. In addition, you might get cheaper interest rates and better payback terms on your gold loan renewal if you already have a relationship with the lender.
What to Consider When Renewing a Gold Loan?
Loan fee:
A processing fee may be charged if the loan is renewed. Consider the costs of renewing a gold loan.
Value of your gold:
Since it was pledged for the existing loan, the value of the promised gold may vary. As a matter of fact, to get the most out of gold, you must examine its current value. You can get a loan for up to 75% of the gold you pledged if you provide the basic KYC documents required for the gold loan.
