You can transfer a gold loan from one lender to another if you get a better deal. Like the balance transfers in personal or home loans, gold loans can also be transferred, depending on the lenders available. Similarly, not all lenders may have a prepayment facility, so you may have to pay a fee to close the existing loan account before moving to another. However, before initiating the process, you must consider a few factors.

Transfer of a gold loan from one lender to another is possible however, some lenders may offer better terms than the existing lender. However, you must weigh whether the new lender’s benefits can compensate the current loan’s prepayment charges. If this factor meets your expectations, consider a gold loan transfer. Factors like interest rates or loan-to-value ratio are vital while transferring a loan. So, remember to ask your new lender about them.

Things to check before opting for a gold loan transfer:

Enhanced Security: Check if your lender can offer enhanced security for your gold, like safe rooms, round-the-clock CCTV surveillance, etc., to guarantee the security of your pledged gold.

Loan-to-Value Ratio: Check if you’re the lender provides a better LTV ratio than your previous lender. It will enable you to get a higher loan amount.

Interest Rate: Find out the interest rates of the new lender. A lower interest rate will reduce your burden of repayment as the corresponding equated monthly installments (EMIs) will be lower. In that case, you can pay off your loan more quickly due to the reduced interest burden.

Higher Loan Amount: Check if the lender is ready to offer you a higher loan amount or a better LTV ratio than the existing one. Opt for it only if you need extra cash; don’t fall into a debt trap. Also, remember to compare the benefits offered by the lenders before deciding.

After you have checked the details, like money you can save on interest, processing fees and other possible additional costs, eligibility criteria, etc., only then apply with the new lender.

However, remember to collect all the documents from the previous lender after closing the loan account. The paperwork is not complicated for transferring the loan to a new lender. You must complete the application form and submit the supporting documents for “know-your-customer” (KYC)information. You will also need to deposit a cheque from the new lender to the old bank to get a dividend and complete the loan transfer process.