Gold loan is a method of availing a loan against your gold coins or gold jewellery like bangles, necklaces, bracelets, earrings, pendants, watches, and so on. These gold items will serve as collateral, against which you can avail the loan from a lender. Quantum of the loan will depend on the rate of the gold pledged. This is a very efficient method of mobilizing personal assets like gold to meet a financial emergency.
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Gold loans help you meet immediate financial requirements. Some of these are as follows:
Banks and NBFCs are not concerned with why you avail the gold loan. You can avail a gold loan from any available lender/bank in order to finance various needs like a good education, a medical emergency, going on a holiday, further investment and so on.
The gold which has been pledged with the Bank or Financial Institution is the security or collateral against which the loan amount is provided.
The tenure can range from a minimum of just 7 days to a maximum of 5 years.
The other fees and charges that might be applicable on a gold loan are: Processing fees, late payment penalty for non-payment of interest, valuation fees and so on.
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There are three options made available by the lenders to borrowers for the repayment of a gold loan. They are:
If the borrower repays interest regularly, then many lenders offer the option of a discount on the prevailing interest rate on the loan against gold. This rebate can range from 1-2% off on the original rate of interest.
Gold Loan interest rates differ from lender to lender. Some lenders offer various gold loan schemes considering different income groups which are specifically designed to meet the requirements of borrowers. The gold loan interest rate in India ranges from 14% to 23% a year. However, these rates are subject to change from time to time. NBFCs accept only gold ornaments as collateral and not gold coins or gold bars.
The following documents are generally provided by the borrower in order to avail a gold loan:
Post-loan disbursement documents, if any.
You can always avail a gold loan in an emergency and save a lot of money in interest payments, as these rates are much lower than a personal loan.
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