All About Gold LoanGold Loan
All About Gold Loan
As the name suggests, Gold Loan is a type of loan which is granted in lieu of Gold ornaments. The Gold Ornaments are pledged by the Borrower to the Lender. The Lender can be a Bank/NBFC which are authorized by the Reserve Bank of India (RBI) to offer Gold Loan. Often called by other names such as Loan Against Gold, Jewel Loan also. It is a type of secured loan as it is granted against the Gold ornaments pledged by the borrower. Many Nationalized Public and Private Sector Banks and NBFC’s offer Gold Loan in India.
Benefits / Features of Gold Loan
- You can avail a Gold Loan at Lower Interest Rate as compared to other Loan options. You can just Compare Gold Loans online at GoldLoanBazaar.com and you can see the Gold Loans offered by various Banks/NBFC’s and on the basis of comparison choose the one that suits your needs.
- Gold Loans are Less Time-consuming Loans and offer Instant Liquidity to the Borrowers as compared to other Loans.
- Gold Loan amounts are starting from Rs 1500 with no upper limits depending on Various Banks/NBFC’s.
- Lower the LTV (Loan-to-Value), Lower will be the interest rates i.e. Lower the Loan amount per gram, lesser the interest to be paid by the borrower( Depends upon Banks and NBFC’s )
- Flexible interest and principal repayment options as per the convenience of the borrower. You can easily pay interest along with EMI or at the time of Loan closure. Some Banks also provide Bullet Payment options i.e. pay all the Interest and Loan Principal at the time of the end of Loan Tenure or Loan Closure.
- Flexible Loan Renewal options are also available if the borrower wants to renew its loan.
- You need not provide Guarantor in order to avail a Gold loan. Therefore, no need to find someone to back you when applying for your loan.
- Very less Documentation as compared to other loans. You can provide simple ID and Address proof in order to avail a Loan.
- A Less time-consuming process as it takes almost 30 minutes to few hours to test Gold, it’s Processing and Disbursement.
- Prepayment facilities are also available with zero repayment charges to certain amount or percentage depending on the Banks/NBFC.
- Very Less to No valuation charges are there for your Gold Loan depending upon the Banks/NBFC’s
Other Important Features:
- You need not provide any Income Proof or Income Tax Return (ITR) documents to avail the Gold Loan. Thus unemployed and non-working people can also avail Gold Loan.
- No CIBIL score is required as CIBIL score is not mandatory for availing Gold Loan.
- You need not provide any specific reason to the Lender in order to avail a Loan. You can avail it for various purposes like Gold Loan for Medical Emergency, Gold Loan for starting a new business or Gold Loan for Business Expansion, Gold Loan For Higher Education of Kids, Gold Loan for construction or repairs of Home, Gold Loan for Marriage purposes, Gold Loan for Agricultural purposes and for other financial problems or any other sort of requirement.
- Very less and Special Interest rates are available for Gold Loans for Agriculture Purposes. Just one has to provide the proof of agriculture-related documents.
- You can get a Gold Loan at Lower/Concessional Interest Rate (for Women customers).
- You are also eligible for Top-up Loan if the Gold Rate /Gold Price increases in the Market. The decision to provide Top up or not solely depends upon the Bank or NBFC.
- You can easily close Gold Loan anytime by paying the Loan amount plus the interest dues. No other documentation and liabilities.
- It also helps in Improving the credit history of the Borrower.
How does Gold Loan work?
Here the Borrower consent to pay the Lender a certain amount of Interest on Gold Loan during the Loan period and thereafter payment of principal and remaining dues at the time of taking back its gold and is abiding by the terms and conditions which both have agreed upon at the time of Loan.
And, the Lender agrees to pay the Borrower the amount agreed for a loan in lieu of Interest and also agrees to return the gold in the same condition as at the time of taking the Loan.
You can pledge collateral in the form of Gold ornaments and gold coins(up to 50 Grams). Ornaments must have a minimum purity of 18 ct. and up to 24 ct. Below 18 ct. gold ornaments and Gold coins below 24 ct. are not eligible for taking the loan.
Valuation Process Of Gold for Loan:
You have to take the Gold that you wants to pledge for money. Appraiser/valuer/assessor authorized or appointed by the Lender will appraise your gold ornaments. On the basis of the valuation, the Lender will quote the maximum amount it can offer against the gold. You can proceed further if you agree with the above valuation of gold, the rate of interest and other charges.
In case if you cease to repay the interest, the lender, as the possessor of the Gold, has the authority to auction your gold ornaments to recover its dues i.e. loan principal and interest overdue. Therefore, it is always commendable to repay interest and all dues on time to avoid any situation/circumstances like this.
Do’s and Don’ts
You must keep these facts in mind while applying for a Gold Loan :
- You should Compare Loans offered by various Bank’s/NBFC’s based on Gold Loan Interest Rates, processing fees, prepayment charges, and other allied fees and penalties. Compare the loans using GoldLoanBazaar Comparison tool and choose the best loan that suits your needs.
- You should pay Interest and Renewal Fees on time so as to avoid Late payment charges and penalties.
- If the omission of payment continues, Lender reserves the right to auction your gold to recover their loan and dues.
- Pledging Spurious/Fake/Stolen Gold Ornaments for availing Gold Loan is Illegal and is a punishable offense under IPC.
Essential Documents Required for Gold Loan:
- Identity Proof such as Passport, Voter ID card, PAN card, Driving License, Aadhar Card, Address Proof such as Electricity Bill, Aadhar Card, Telephone Bill, Ration Card, Driving License, Passport Copy.
- Proof of landholding in case of Agriculture Loan
- Passport Size Photographs
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