A secured loan obtained by the borrower from a lender by pledging their gold items (within the range of 18-24 carats) as collateral is known as a gold loan, sometimes known as a loan against gold. Based on the gold’s current market worth and quality, the loan amount is normally up to 80% of the gold’s value. A secured loan offered by banks against the applicant’s own gold that is to be kept as security or collateral with the lender is called a gold interest rate.
The collateral or security used by financial organizations to give gold loans is the applicant’s own gold jewelry, coins, or decorations, which are returned to the borrower upon prompt and complete loan repayment. A loan secured by gold jewelry is often offered for a short- to medium-term time period. People can use the Gold Loan Calculator to find the EMIs instead of the loan, which will aid in loan planning and monthly budgeting.
Documents for a gold loan must be sent after your eligibility has been verified. By providing your KYC documentation, you can submit an application for a loan secured by gold. To qualify, you only need to meet the bare minimum requirements.
Aadhar Card and other crucial documents are needed for a gold loan.
- proper passport,
- legal driver’s license
- ID for voting,
- the PAN Card
- NREGA Job Card as identification.
- Card Aadhar,
- Passport Valis,
- a valid driving permit,
- ID for voting,
- the PAN Card
- National Population Register’s letter,
Rates of Interest and Fees
We are eligible for up to a 2 crore gold loan. The annual interest for gold is between 9.50% to 28%. Of the loan amount, there is a processing fee of $75.0. According to state legislation, stamp duty must be paid and is deducted up front from the loan amount. The fee for receiving cash at cash nodes is 50/-. If the outstanding balance is not repaid before the maturity date, a penalty interest charge of 3% per year will be applied to the outstanding balance. This penalty interest rate is in addition to the interest rate slab mentioned above. There is a fee of 40/- each physical notice. The cost of recovery is 500. The cost of the advertisement is 200.
Interest May Be Charged For a Minimum of 7 Days
In accordance with the legislation of each state, additional CES will be applied to all charges.
The interest rates that apply to gold loans are varied and subject to a number of outside influences.
Golden Loan Benefits
1. A Reduced Interest Rate
Given that they are secure loans, gold loans typically have cheaper interest rates than other financing choices like personal loans, loans, or other secured loans.
2. More Rapid Processing
Gold loans have lax qualifying requirements and little documentation because they are backed by actual gold. Lenders nowadays can process loans more quickly as a result.
3. Appreciate Constant Liquidity
Another name for gold loans is “ATL,” or anytime liquidity. This implies that, in contrast to other financing choices, you may apply for a loan in less than 30 minutes without having to fill out a tonne of paperwork. This function enables you to quickly obtain a loan against gold whenever you need another.
4. The Choice to Pay Solely Interest
One special aspect of gold loans is that the borrower can opt to pay only the interest portion during the loan term and the principal amount because when loan is closed.
5. No Processing Charge
The fact that there are no processing expenses involved with gold loans is one of its best qualities. These loans are therefore the best ones to apply for.
6. Absence of Foreclosure Fees
Contrary to other loan options, there aren’t any fees or penalties for securing on a property or for paying off a loan early.
7. Income Documentation is Not Needed
Since the loan is backed by gold, financial institutions often do not require applicants to provide any proof of income or employment. Therefore, whether you are employed by a business or operate for oneself, anyone can apply for a gold loan.
8. There is No Credit Score Requirement
The approval of a gold loan is not based on your credit score, unlike the other loans. The loan sum in this instance is determined by the market value of gold. But you may raise their credit score by taking out a gold loan.
9. Gold is Safe
The financial institution provides three layers of security for any gold jewelry you pledge as security. When you fully repay the loan, your gold jewelry will be given to you after being properly stored in their vault in the meantime.
10. There is No Limitation on How the Money Will be Used.
Since there is no oversight of how the revenue generated through this loan is used, you have the freedom to utilize it to cover any type of expense, including those related to home repairs, further education, bridal costs, or sudden medical expenses.