Gold Loans

Every Indian household has some amount of gold in form of jewellery or other forms like coins,biscuits etc.As per estimate Indian households hold over 20 thousand tonnes of gold.

 

One can avail a loan by using personal gold holdings as a collateral.Gold loan can be a cheaper alternative as compared to personal loans to meet short term requirement.It requires minimum documentation and requires very low processing time.

 

Points to remember while going in for gold loan

 

  • Loan can availed from both banks and NBFC.NBFC will have a comparatively lower processing time but may charge higher interest rate while banks will offer better rates but will have more processing time.

 

  • Loan can be availed up to 75% of the value of jewellery. Gold coins are also accepted if they are issued by Indian banks.

 

  • Gold is valued at the average closing price of 22-carat gold for the preceding 30 days, as quoted by the India Bullion and Jewellers Association.

 

  • Gold purity should be in minimum 18 carat. If purity is less than 22 carat then it will be translated to 22 carat for valuation.

 

  • Precious stones in jewellery will not be considered for valuation.

 

  • Gold loan have a very low processing time as time is spent in only verifying purity of gold.

 

  • Interest rate ranges from 12-16% and 14-26% for banks and NBFC respectively.NBFC may offer better deal if you can negotiate.

 

  • Prepayment can be done through bullet payment or EMI.In case you choose bullet payment option then you will have to pay interest at regular intervals.

 

  • Generally maximum tenure offered is 1 year.

 

  • Banks will charge penal interest rate for late payment. In case of default the jewellery will be auctioned and person will lose entire value of gold, irrespective of loan amount.

 

  • Your gold will be secure with bank as it will insured .In case of loss due theft the entire value of gold will be reimbursed based on prevailing rates.

 

  • Interest rate will depend on your risk profile, loan among and LTV (Loan to gold value) ratio. Lower LTV will get you cheaper interest rates.

 

  • One needs to check for valuation charge in addition processing, stamp duty,pre-closure and late payment charges. Valuation charge is for estimating value of your gold.

 

  • No guarantor is required for gold loans.

 

  • For documentation only identity and residence proof is required.