A gold loan is a loan secured by gold jewellery that a customer deposits with a gold loan company as collateral. In exchange, the corporation provides the consumer with a loan amount based on the current market value of gold.
Taking a gold loan is simple and secure, and it has long been a popular financial practice in India. Many people give their gold jewellery to financiers in order to raise finances for an unexpected emergency or even to establish a new business. You can receive a gold loan from both banks and non-banking financial institutions (NBFCs).
Some of the most common questions that many buyers have about gold loans are listed below:
What is a gold loan?
When you use your gold jewellery as collateral to borrow money from a lender for a set period of time. The buyer then repays the loan amount plus the relevant interest rate to the lender bank until the loan term ends.
Who is eligible for a gold loan?
If you are a trader, businessman, salaried employee or self-employed, or a farmer, you can apply for a gold loan. The age requirements differ by the bank, but if you are between the ages of 18 and 60, you can acquire a loan against a gold loan.
How long does it take to get a gold loan approved?
Applying for a gold loan is a straightforward and quick process. If you have all of the required paperwork, you may be able to acquire your gold loan the same day.
To apply for a gold loan, what documents are needed?
When asking for a gold loan, the following documents must be submitted:
Identity Proof/ Pan Card/Aadhar Card /Borrower's Address Proof /Two photographs for gold loan application form to be duly filled out by the applicant.
When is the best time to apply for a gold loan?
Some of the reasons to apply for a gold loan are as follows:
When you require a loan urgently and for a short period of time.
If you want to avoid the time-consuming paperwork that comes with a gold loan, you can do so by providing minimum KYC documentation.
There is no requirement for a CIBIL score or credit history.
If you want to save money on your loans.
A gold loan has no prepayment penalty or processing costs, lowering the overall cost of the loan.
Is there a minimum or maximum amount that can be borrowed for gold?
Gold loans are available from a variety of lenders, with amounts ranging from Rs 10,000 to Rs 20 lakhs. It is possible that it will differ depending on the lender. Some
Loan requests for more than 20 lakhs may require management approval, depending on the norms of each financial institution.
What are the Options for Repayment?
The gold loan can be repaid in instalments. There are a variety of alternative repayment methods available. You could, for example, pay the interest at the start and the principal at the end of the loan period.
What is the formula for calculating the interest on a gold loan?
The majority of banking organisations charge interest on gold loans. It is calculated using simple interest on the outstanding loan amount.
What Happens If a Borrower Misses a Payment or Is unable to Pay Dues by the Due Date?
Because the gold was pledged as collateral, failing to repay the loan (three consecutive instalments or more) will result in the gold being auctioned off by the bank or financial institution. This is now a non-performing asset that will be liquidated.
What are the advantages of taking a gold loan?
When compared to other sorts of loans, a gold loan has numerous advantages. Speedier processing time, a larger loan-to-value ratio, lower interest rates, the convenience of collateral availability, faster loan disbursal, and reduced eligibility restrictions are all advantages of a gold loan. Other incentives, such as a waiver of the processing charge and insurance coverage, may be available depending on the lender.
Finally, if you require financial aid and are unwilling to sell your jewellery, it is preferable to use it as collateral to repay and obtain a gold loan. It's a fantastic way to receive money quickly when you need it. People prefer gold loans to other types of loans because they have a lower interest rate and are processed more quickly.
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