Gold loan is a type of secured loan i.e. the loan is provided against collateral as different types of gold jewelry or gold coins. You have to deposit your gold with the lender i.e. NBFC or bank and you get the deposited gold ornaments or coins back simply after you have taken care of the loan sum in full including interest. Gold loan business, being secure, features short processing times, a low interest rate and short to medium term tenure. You can profit several gold loan schemes from banks and other monetary organizations. The measure of loan against gold you will get depends upon the value of the gold you surrender for the loan.
The value and immaculateness of the gold will be checked before the bank or NBFC takes possession of the gold. This loan is a decent alternative, on the off chance that you are searching for moment liquidity. Additionally, since the endorsement of this loan does not depend upon your credit history or income, you need not stress over your adversely affecting your credit score nor scramble for income proofs for loan endorsement.
For what reason to Choose a Gold Loan?
A few reasons for the ubiquity loan against gold are as per the following:
- Gold loans feature a low interest rate as compared to most other loan options
- Gold Loans tenure ranges from a few days to 5 years or more depending upon the lender.
- The repayment choices on gold loan can be selected as per the choice of the borrower.
- In most cases, the lender does not charge a pre-payment penalty on gold loans.
- Minimal documentation required and PAN Card isn’t obligatory for this loan
- Fast disbursement i.e. loan is provided within a few minutes to a few hours.
Gold Loans Features
- It is a secured loan. Therefore, there is no requirement of a decent credit history to profit a gold loan.
- You have a choice to pay just the interest component and the principle can be paid as a singular amount sum toward the end of the loan tenure.
- For those of you involved in agriculture, gold loan schemes can be availed at a reduced rate of interest which can be as low as 8%.Since your gold is the collateral, which is deposited with the lender, the paper work involved is bare least. All you require is your personal id and address proof.
- The loan disbursal time can be as short as 5 minutes.
Gold Loan Interest Rates
Most gold loan providers charge just a little percentage, normally 3% to 5% over the base rate when giving a gold loan. In this manner for a base rate of 10%, the interest on a gold loan can differ from 13%-15% per annum. Gold loans feature a tenure that ranges from a few days to 5 years. The loan interest rate additionally tends to fluctuate based on the tenure of the loan just as the gold loan sum.
Gold Loan Eligibility Criteria
There are no specific gold loans eligibility criteria to fulfill to get gold loan. Anyone can apply for gold loan, as long as the person seeking a loan possesses the gold. The authorizing gold loan is determined by the value of gold the borrower submits.
You can get gold loan in the event that you meet the accompanying criteria:
- The person ought to be above the age of 18 years.
- He should possess gold
Documents Required for Gold Loan
Unlike other loans where documentation is a significant piece of the process, gold loan documents required to be submitted are just the essential KYCs like:
- Two passport size photographs.
- A copy of identity verification documents, for example, your visa, driving license, Aadhar Card, apportion card etc.
- A copy of address confirmation documents, for example, your electricity bill, telephone bill, other service bill etc.
Gold Loan: Important Things to Know
- Lending organizations offer loan of up to 75% of the gold value, after checking the metal for immaculateness and ascertaining the market gold prices.
- While gold jewelry is perfectly acceptable to any bank or NBFC as collateral, bars are not accepted and just specific types of gold coins are accepted as collateral by banks only.
- If the ornaments provided feature precious stones, they are valued uniquely based on the weight of gold in the ornaments.
Top Banks and NBFCs Providing Gold Loans in India
A majority of Non-Banking Financial Companies (NBFCs) and banks (both private and open sector) in India offer gold loans to people. Some notable NBFC players are IIFL, Muthoot Financial, Mannapuram Finance and Bajaj Finserv, while key banks giving loan against gold include Axis Bank, HDFC Bank, State Bank of India and Allahabad Bank. You can locate the complete rundown of banks and NBFCs in India that provide gold loans depending on your contributions by utilizing our eligibility device.
Things to Keep in Mind before Taking a Gold Loan
To get greatest returns and make wise decisions regarding your precious gold assets, you should keep the accompanying focuses in your brain while you profit gold loan:
- Gold loans tenure are generally short, going from a period of 1 year to a limit of 2 years. Therefore, the borrower ought to be sure about his repayment limit with respect to the loan within the stipulated time.
- Gold loan rates are lower as compared to other unsecured loans. Yet, gold loan rate of interest can change starting with one lender then onto the next lender. Therefore it is best to compare the available options.
- The measure of loan that will be sanctioned to you is limited up to 80-90% of the value of Gold, as per current market gold prices, that you pledge for the loan.
- Gold loans have the benefit of least documentation, faster endorsement and snappy disbursal. The lender keeps your gold as a security for the loan and in case you default on your payments, he has the power to confiscate it. However, it is very imperative to know the credibility of your lender as your gold remains with him for the loan tenure. Therefore, it is best to choose the reputed lenders with proven track record.