What is gold loan?
The gold loan is a personal loan which is actually secured to the gold metal jewelry or coins which the consumer actually pledges with a concerned bank.
How to avail?
There are many people in India who own a lot of gold ornaments which are just lying idle at their homes without adding any value. The banks today provide the gold loan to the consumers against their ornaments in order to unlock the high-end value of this precious metal. Even the entire procedure of availing such loan is quite simple and straightforward. First of all, the lender bank will carry out the evaluation of these jewelry items and check them out for their purity, weight and few of the banks also ask the owner to show the proof of the ownership of these assets. Once the jewelry is verified, the loan will be sanctioned to the consumer.
Gold interest rates of some of the leading banks in India
Comparing the gold interest rates of the leading banks in India, it is ranging anywhere between 9.90 to 11.5%. The rate of interest is charged on the loan amount which has been borrowed for particular loan tenure. The SBI bank is giving the gold loan at an interest rate of 11.05 %.
The factors which govern the interest rate for the gold loan includes:
Loan money– This is actually the money that has been borrowed from the bank and for the small amount of loan, the interest rate would be higher and vice versa.
Loan to value ratio-Banks is charging high-interest rate on the gold loan which has the high LTV ratio. So higher is the loan amount against a particular value of jewelry, the more will be the interest rate.
Relationship with the lender-The bank will be offering a lower rate of interest on the gold loan to the existing account holder and along with the quick turnaround time too.
Benefits of taking the gold loan
- One of the greatest advantages of availing this type of loan is there is no requirement of any sort of documentation or the validation of the income of the borrower. So even if an unemployed or the unsalaried person can also avail this type of loan.The gold loan is actually available at a much lower interest like it is in the range of 12 to 16% which is lower in comparison to the personal loan where interest is levied in the range of 15-26%.The borrower is required to pay only the interest amount throughout the whole tenure of the loan and when there is an end of the tenure then the full borrowed amount can be paid within a single shot.
- The gold loan is most convenient to avail as the borrower just need to pledge his/her gold with the financial institution and he can get the loan to the extent of up to 80% or more of the market value within a short turnaround time.
- No tedious and time taking documentation and minimum processing time There is no required for any sort of the tedious documentation and it can be taken easily whenever there is an emergency. Banks just take few hours of time for carrying out the gold loan processings whereas there are some financial institutions like NBFC which just takes few minutes for processing the gold loan.
The process of Gold Loan Rate of Interest
The gold loan is the perfect way to get the instant hot cash. You can get cash instantly, but you have to follow some instructions to get more convenience. You have to pay the interest and the principal amount within the estimated time. If you missed to pay it, your gold will be sent for auction after a certain time limit.
Gold Loan Interest Rates bank wise Interest rate
Many banks give the gold loans for different interest rates according to their terms and conditions. You have to read and understand the terms and conditions of that particular financial institution or lender. The interest rate will range from 11.5 to 25 percent.
SBI offering 11.25 per annum.
Have to know before applying gold loan procedure.
When you choose for the gold loan, make sure you are confident to return the money within a time period. Else, you need to pay penalties or your gold may come under the financial institutions and it may go for sale. Before applying for gold loan, you need to know the entire information about interest rate, terms, payback period, penalty and more about the bank or financial institutions. Check and make a comparison of interest rates of different banks. To apply for a gold loan follow the steps
- You need the proof like ration card, telephone bill, voter ID, passport or driving license.
- For the signature proof, you can submit your documents with your signature with two Passport-size photos.
- When you go for the gold loan, there are some additional charges you may need to pay. You may need to pay processing charges in some banks.
- The valuation charges are actually paid by the service provider.
- If you failed to pay the repayment or interest amount, the service providers charge the late penalty.
Advantages of gold loan
- They don’t demand your salary or income certificate. They didn’t ask for the history of the credit card. Even unemployed people can also go for the gold loan.
- Unlike the other loan process, it doesn’t need more documents. You can easily apply for the loan with the fewer documents like address proof and Id proof.
- The gold loan interest rates are very low when compared to the other loans. Normally, the interest rate on the gold loan is of 12 to 16 percent.
- It is the most convenient and the simple process. You can get the loan amount up to the 80 percent of the value of gold in the market.
- The processing time for the gold loan is very less. Usually, banks complete the processes in few hours. And in private financial companies, they take few minutes to complete it.