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About Gold Loan

Opting for Gold Loan Schemes Is Truly Brilliant Idea to Combat One’s Financial Crisis

In simple words, a gold loan can be defined as a loan that is secured against personal gold ornaments or coins. Whoever wishes to have a loan has to give his/her gold ornaments to the lender who would give funds in exchange for them. Hence this is one great option for people seeking money in hard times! The only thing which you should keep in mind is always choosing a lender who is genuine and recognized by the government. Banks, as well as non-banking finance companies, offer gold loan facility to people.

Please note that the quality of the lender counterpart matters. There are many NBFCs in the country who offer attractive terms for gold loans but could possibly shut down without notice leaving you at a big loss. Hence please reconfirm the reputation of the lender as it is very important to study the various lenders and then choose the one who is genuine.

Important Points about Gold Loan

Points to keep in mind before you meet any such institution are as follows:

  1. You need to be above 21 years of age to apply for this type of loan scheme.

  2. Banks except for gold coins as well as gold ornaments in exchange for funds whereas non banking finance companies would accept only gold jewelry.

  3. Gold Loans are short-term loans and the repayment period can range from one month to a few years. If you are in need of money for immediate expenses and expect to be able to pay it back in the short-term, then this type of gold loan might be an ideal choice.

  4. Gold has to be pure of around 18 to 24 carats.

  5. One would be sanctioned the loan only after proper verification and scrutiny of the documents provided by borrower and quality assurance of gold.

  6. Never think of cheating the company in such cases as it is a legal offence.

  7. You will not get the loan of the total value of your gold. You can expect around 80% value of your gold given as loan for a pre-specified period.

  8. Also, be prepared to pay interest on your loan amount.

  9. Understand the terms and conditions with the lender nicely and then sign on any legal documents.

  10. You won’t have any other way but to repay the amount back in defined term and hence get your given gold back.

  11. Precious stones in jewelry will not be considered for valuation.

  12. The gold loan has a very low processing time as time is spent in only verifying the purity of gold.

  13. No Guarantor is required for gold loans

Features of Gold Loan

Let us put some light on the captivating features of a gold loan scheme:

  • The best part about gold loan procedure is that there are no hidden charges which you need to pay at any point in time.

  • Entire loan procedure is easy and hassle-free.

  • Interest Rates are kept quite low to support the economic situation of the borrower and hence help him in rebuilding his life.

  • You would be happy to know that gold schemes offer convenient repayment schedules. Hence you don’t have to face too much burden at any point in time.

If you are facing any of the following situations, then Gold loans are the most lucrative and safe option for you:

  • To meet the current working capital requirements

  • In situations where you need to purchase new equipment for development of your business or shop

  • To meet the family or personal consumption expenditures like a marriage of your daughter or sister, medical emergencies, educational needs etc.

  • When you suddenly face a tremendous loss in business or share markets and have to revamp your business

  • Any sudden death or mishap in family

  • For persons engaged in gold/ jewel manufacturing/ trading

You must have listened about gold loans from your well-wisher or family member. But it is better to be confident about all associated benefits with Gold loans before you actually meet the banks or other institutions for fund requirement.

“Self Awareness is simply the first step promoting a good decision!!”

Benefits of Gold Loan

The benefits of taking a gold loan are multifold. Few of the more mentioned below for your reference:

  • Faster processing time than normal loan schemes:As the gold loans are provided with a backup of physical gold, this process is somewhat faster. The main reason of this instant facility is that banks have your verified gold with them and in cases of no return; they can easily sell the gold back and get whatever have they lend to the client. It normally takes few hours for banks to lend funds against gold.

  • Bad credit history of the borrower is not a hindrance: The gold loan scheme is very different. Normally, the loans are provided only after checking the person’s credit history, his capital standing, and repayment capability. But as the gold loan is used as collateral, the lenders are not highly worried about the principal amount component and hence don’t check the credit history of the borrower.

  • No Income proof documents are required:Generally, in most of the banks or non-finance companies, they do not ask for any income proof as the loan is basically secured against the gold handed over to the bank.

  • Lower Interest Rate: Unlike other loans, the interest rates imposed on gold loan are generally in the range of 13% to 14 %.Normally, personal loans start with an interest rate of 15% or higher. If you even provide another security as collateral, then the gold loan interest rate can be reduced further.

  • No processing fees are levied:Majority of the banks do not charge any sort of processing fees as these loans are given instantly within hours in lieu of the gold which is held as collateral with the lender bank.

  • Safety of gold is guaranteed: Your Gold will be untouched and hence remain safe in a vault with the lender bank or company. After you repay the loan, you will get your gold back in the same form and same weight.

  • Additional benefits: Some of the other benefits are flexibility in repayment and no foreclosure changes.

Eligibility Criteria for Gold Loan

Kindly go through the below points to reconfirm the pre-requisites needed:

  1. The minimum age to avail any sort of gold loan in India is 21 years and the maximum age is set to 65 years.

  2. Banks offer gold loans at an interest rate of 11 to 17 percent per annum.

  3. Non-banking finance companies who offer gold loan schemes charge an interest rate of 15 to 26 percent per annum.

  4. Documents which you need to carry along are:

    • Identity proof,

    • Residence proof,

    • Signature proof,

    • Good passport size photograph.

    • PAN card details (It is necessary only for loan amounts more than 5 lakhs in Indian currency)

  5. The duration of most of the gold loans is generally one year. It can be extended up to three years if needed for banking finance companies or banks with a prior commitment.

Banks providing Gold Loan

  1. HDFC LTD

  2. HDFC BANK LTD :- HDFC is the only bank offering gold loan without documentation. HDFC’s Sampoorna Barossa gold loans for less than Rs 50,000 are available for the rural customer; minimum amount is 50,000 for urban customer.

  3. AXIS BANK LTD :- Any individual having age between 18- 75 years qualify for a GOLD loan with AXIS bank.

  4. ICICI BANK LTD

  5. YES Bank

  6. State Bank of India : - SBI offers gold loans to individuals having an age of 21 years and above. The minimum loan amount is INR 10,000 for the rural customer and 20,000 for urban customers and the maximum loan amount is 20 lakhs for both.

  7. Bank of Baroda

  8. Standard Chartered Bank

  9. India Bulls Finance

  10. Aditya Birla

  11. DBS

  12. Kotak Bank

  13. Edelwise

  14. DHFL

  15. PNB Hosing Finance

  16. Tata Housing

Apart from this, other leading private and government banks provide facility of GOLD LOANS