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Gold loan is a method of availing finance/ loan against your gold ornaments or jewellery such as bangles, necklaces, bracelets, earrings, pendants, watches, gold coins, etc. This gold will act as the collateral against which you can avail the loan from a lender. The loan amount will depend on the rate of the gold pledged, per gram. This is an efficient method of mobilizing personal assets in order to finance various requirements quickly.
You can avail a gold loan from any available lender in order to finance various needs, such as for educational purposes, medical emergencies, going on a holiday, further investment and so on. The purpose for which you are availing the loan is not a factor that the lender looks into while offering the same.
The gold that has been pledged with the Bank or the financial institution acts as the security or collateral against which the loan amount is provided.
The tenure options can range from a minimum of just 7 days to a maximum of 36 months.
The other fees and charges that might be applicable on a gold loan are – processing fee, late payment charges/ penalty for non-payment of interest, valuation fees, etc.
There are three main options offered by lenders to borrowers for the repayment of a gold loan. These are:
Several lenders offer the option of discount on the prevailing interest rate on the loan against gold if the borrower repays the interest regularly. This rebate can be 1% - 2% off on the original rate of interest.
Gold Loan interest rate varies from lender to lender. Some lenders offer various gold loan schemes which are specifically designed to meet the requirements of borrowers from different income groups. Based on this factor, the interest rate applied on the gold loan varies as well. Generally, the gold loan interest rate in India ranges from a minimum of 14% to a maximum of 23%. In order to know more, kindly get in touch with the lender of your choice.
Generally, the following documents have to be provided by the borrower in order to avail the gold loan:
Any Indian citizen can avail a gold loan from banks or Non-Banking Financial Institutions (NBFCs) and generally the age criteria ranges from a minimum of 18 years to a maximum of 75 years. This might vary from lender to lender.
You can either directly walk into a branch to make a cash payment or pay online using the company’s web portal. Debit card, credit card and demand draft payment of gold loan is a limited option. Kindly contact your lender for more information on the same.
Factors such as rate of gold on the particular date, purity of the gold used to make the jewellery, etc. affects the loan amount that you will receive against the gold ornaments pledged with the lender.