If you have gold jewellery, gold coins or gold bars you can use any of them as collateral to secure a cash loan. Gold loans are usually offered by Pawnbrokers who first have to determine the value of your gold. When doing this, Pawnbrokers have to determine the purity and weigh the gold being presented to them and add their interest.
Before you settle on a gold loan provider you should do some research on the companies that offer these types of loan in your area. Find one that has competitive rates and one that deals fairly with its customers. This means you may have to conduct some internet research and scour review sites to see what previous customers have had to say about their service.
Between gold jewellery and gold bullion. Gold bullion is the one that usually pays out the most. Gold bullion is made of fine gold with purity levels of up to 99.9% the price you will get for it will be close to the spot price which currently sits at around $1,900. Gold jewellery on the other hand is made up of pure gold alloyed with other metals. The highest purity you are likely to get in a piece of gold jewellery is 18karats or 75%. This is important to note if you are looking to loan a substantial amount of gold. Gold loan providers like Pawnshops base the value of the gold used as collateral on the market price of gold at the time the loan is taken out. Be sure you understand the procedure and read all the terms of your agreement. Repayment periods can range from 7 days to 30 days and more
The longer the repayment period the higher the interest you are likely to be charged.
For instance a gold loan of $200 night attract a 4% interest rate when it, 6% over 14 days or 10% o we 30+ days. Interest could also vary depending on the loan amount. The higher the amount borrowed the lower the interest rate. So, in comparison to a $200 gold loan, a $1000,00 loan could attract interest of 4, 5 or 8 percent over periods of 7,14 and 30+ days.
What if you can’t repay the loan on time?
Because you use gold as security for a loan, if you cannot repay the loan, you will forfeit your gold item to the loan provider. In the case of a pawnshop, the Pawnbroker can sell your gold to recoup the money. Some loan providers may be more lenient and extend the loan provided you pay the interest you owe before the due date.
Why take out a gold loan?
There are different benefits for taking out a gold loan in Melbourne.
- It is quick and convenient
You can simply walk in with your gold, have it valued, agree on the price and walk with cash in hand. You don’t even have to make an appointment.
- No credit checks
Gold loan providers like Pawnshops do not check your credit score. Should you default on payment, they can sell your gold to get their money back.
- Low interest rates.
Short term loans and payday loans usually attract high interest, that’s not the case with gold loans. The average interest you can expect to pay is 30% APR.