What is gold loan?
You borrow your(jewels or coins) to a financier such as a bank, NBFC, or gold loan company.The financier lends you a loan based on the amount of value of your gold.Your gold remains safely with the financier till the time you repay your loan.if you know about car loan here is the link!here is more about how gold loan works in india
Key Features
Loan Amount: Up to 75-90% of the value of gold
Interest Rate: Usually less compared to other loans; this loan would come around 7-15 percent per annum.
Tenure: Flexible, from a few months to 2 years.
Repayment: You can opt for EMIs, lump sum, or interest-only payments.
Quick Disbursement: Usually processed within hours.
Who Can Get a Gold Loan?
You must be 18-70 years old.Your gold should be at least 18 karats pure.You don’t need a great credit score.How It Works
Application: Visit a lender with your gold and ID proof.
Gold Valuation: The lender assesses your gold’s weight and purity.
Loan Offer: You are offered a loan amount based on the valuation.
Agreement & Disbursement: Once you accept, you receive the loan amount.
Gold Storage: The lender keeps your gold.
Repayment: Repay the loan as agreed upon. Once you have repaid the loan fully, they return your gold.
Documents to be Submitted
Identity proof (Aadhaar, PAN, Voter ID, Passport)Address proof (Utility bills, Aadhaar, Rent agreement)Proof of holding gold (not required, if you pledge in person.)
Benefits of gold loan:-
Fast Processing: Suitable for urgent requirements.
No Credit Score: You can still get the loan even with a bad credit history.
Flexible Repayment: Choose your method of repayment.
Ownership Retained: You own the gold even while it is being pledged.
Risks and Disadvantages
Forfeiture of Gold: In case you fail to repay, the lender may sell your gold.
Higher Interest for Longer Tenures: You pay interest on top of that over the long tenure.
Valuation Issues: Sometimes, the lenders undervalue your gold.
Popular Gold Loan Providers
Banks: SBI, HDFC, ICICI, Axis Bank
NBFCs: Muthoot Finance, Manappuram Finance
Local Cooperative Banks
Regulations
The Reserve Bank of India (RBI) regulates gold loans to ensure fair practices.Tips for Borrowers
Compare interest rates and terms from different lenders.Repay on time to avoid losing your gold.Choose shorter tenures to minimize interest costs.Gold loans can be a helpful financial tool for short-term needs. Use them wisely and repay on time.
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