Gold Loan FAQs
Are you looking to take a gold loan? If yes, then you must get your doubts regarding this type of loan cleared before you avail the loan. Once you know all the facts about a gold loan, you can make a successful application and successfully get the money in a short while.
Here are some gold loan FAQs for you to study.
1. What exactly is a gold loan?
A gold loan is a secured loan where a piece of gold ornament is pledged as collateral. The value of the loan is about 75% of the total value of the gold pledged. The loan can be repaid in flexible EMIs. the interest rate offered on a gold loan is attractive and low because it is a secured loan. Gold loans are easily available from banks as well as NBFCs.
2. What kind of gold needs to be pledged?
Gold such as a piece of jewellery, can be pledged as collateral. The value of the loan will depend on the purity of the gold and thereby on its value. If the ornament has gems on it, the value of the gems will not be considered and only the value of the gold will be calculated. Usually, gold bars and coins fetch a higher loan as they are purer than golden jewellery.
Also Read: Pros & Cons of Investing in Gold
3.What is the process of getting a gold loan?
It is very easy to get a gold loan. You simply need to walk into the office of the lender with your gold. You need to produce a copy of your PAN or Aadhar card. You need to submit some passport size photographs. Once that is done, you can pledge the gold and get your loan.
4. Does the loan provider keep the gold safely?
Yes, the lenders keep your gold very safely. The gold is locked up in vaults that are monitored by CCTV cameras. The gold is also commonly insured by the lender to offer an added level of security to you. Once you pay all the EMIs and repay the loan in its entirety, along with the interest, your gold is handed back to you.
5. What is a gold loan eligibility?
Any person who is above the age of 18 and a citizen of India can get a gold loan, provided he has all the required documents with him.
6. How quickly is a gold loan approved?
If you carry the gold with you and take all the papers along, your gold loan will be approved instantly. The loan will be disbursed and the amount will reach your bank account in just a few hours. A gold loan is therefore one of the easiest and most convenient types of loans to get.
7. What documents required to avail a gold loan?
Before sanctioning any loan, the bank is supposed to verify the related set of documents. Theses essentials act as identity proof. Some of them include Aadhar Card, one address proof, voter ID, Password. Income proof can be used as the most viable source.
Also Read: Is It Good Time to Buy Gold
8. Who can apply for a Gold Loan?
The age should be 18 and above. Anyone can apply for a Gold Loan, be it a housewife, working professional or self-employed. IN the case of the agriculture industry, farmers are also eligible to apply for a gold loan. Of course, having a gold asset that be pledged is a mandate.
9. What are the Repayment Options?
Gold Loan comes up as the most flexible option. Along with the secure processing of the loan, there is ease in payment procedure also. Repaying the entire amount in EMI’s is an option. Another alternative choice can be to refund the principal amount at the end of the tenure.
10. Is my Gold safe with the lender?
Our gold jewels are very precious to all of us. No need to worry as your ornaments are kept safe and intact. There are 24×7 CCTV cameras, and there is complete surveillance. In case of any unforeseen happening, the loss will be covered.
11. How much interest rate is applicable on a Gold Loan?
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The various banks that can sanction gold loans include nationalized banks, private banks, and NBFCs. On average, the rate of loans against gold is affordable. The annual interest rate on the Gold Loan can vary between 13% to 16%.
12. Can you define the total period of Gold Loan ?
The loan period for repaying the gold loan is usually between 3-12 months. There is also an option in which we can extend our period upto 2 years.
13. Short-Term or Long Term plan of Investment?
Having a robust financial base is very important before availing a loan. In case we have not made a timely payment, the bank has full authority to sell the gold to recover the entire amount. Hence, it is recommended to take a gold loan for the short term so that we can improve the whole amount.
14. What Charges involved in terms of Gold Loan?
The rate or the number of charges varies from lender to lender. It is advisable to study the market and compare the costs. A minimum amount of processing fee of 1% is applicable.
Read Also: Things to Know Before Selling Gold
When you are faced with a financially challenging situation, do not be in a hurry to sell your precious jewellery. Instead, use it as collateral to pay and get a gold loan. Repay the loan at your own convenience and get your precious ornaments back. This is an excellent way to get quick funds when you need to do so. Preferring Gold loan over other loans acts as a perk due to its low rate of interest and fast processing.