All About Gold Loans

Gold loans are short-term loans for people who need cash in an emergency. It is a secured loan and the borrower deposits collateral for the loan.

The loan is given when the borrower deposits gold or gold ornaments to the bank. Different banks provide different interest rates; moreover, government bank interest rates are much more affordable than private banks.

Here are some government bank interest rates.

  • IDBI Bank: 7.20%
  • SBI Bank: 7.50%
  • Bank of Maharashtra: 7.70%
  • Canara Bank: 7.60%

Private bank interest rates are higher, such that

  • Kotak Bank: 10%
  • HDFC BANK-12%
  • ICIC BANK-12%
  • Axis Bank: 12%

NOTE: These data can be changed.

To take a gold loan, you need to pledge your gold or gold ornaments to the bank. The tenure of the gold loan is 3 months to 4 years with a loan amount of 1.5 CR, which depends on different lenders.

Interest Rate: 7% onward

Amount of Loan: Up to 1.5 CR

Loan tenure: 3 months onward

Processing fees range from nil to 2% of the loan amount, plus GST.

Some Key Features of a Gold Loan

1) Purpose of the Loan

A gold loan is versatile and provides immediate funds for needs such as medical emergencies, investments, personal financing, and many more.

2) Secured Loan

This provides less risk to the lender because the collateral ornaments are with the bank. The value of the loan is based on the value of gold .

3) Loan Tenure

The minimum loan tenure is 3 months and the maximum is up to 4 years, but this also changes with the lender’s terms and conditions. Borrowers have to choose their tenure as per their repayment capacity and financial goals.

4) Charges

Many fees may apply to gold loans, like processing fees, late payment charges, and prepayment charges.

5) Repayment Options

Payment of EMI every month, which makes budgeting easier.

Monthly Interest Payment Option

  • Every month, the interest needs to be paid and the principal amount repaid at the end of the tenure 
  • Borrowers can pay the interest amount in advance and the principal amount at the end of their tenure. .

 6) Quick Loan Disbursements

With minimal documentation, The gold loan can be approved quickly as it is often secured. Within a few hours of application loan is approved.

Document Required and Eligibility Criteria.

  • The minimum age should be 18.
  • The applicant must have the documents for the loan.
  • 18-22 A cart of gold can be pledged.
  • The applicant must have a good credit score, preferably 750.
  • Document Required for Gold Loan

1) Filled Application Form

2) Passport-size photo

3) Address Proof; Bills; Passport

4) Identification Proof:

Adhaar card

Permanent Account Number

Driving License

Passport

5) Proof of signature and age

Steps to Apply for a Gold Loan

Here are certain steps that if you follow them, you can get a gold loan.

Step 1: Research

Identify various lenders and compare them with your needs and eligibility criteria. Decide which one is best suited for you as per your needs.

Step 2: Have the Required Documentation

Before applying for the loan, you must have all the documents mentioned in the article, such as address proof, signature proof, etc. 

Step 3: Application

The application process can be both online and offline; you can apply as per your choice.

Online applications are submitted through a bank or non-banking websites.

To apply offline, you will have to visit the bank and fulfil all the requirements as per their request.

Step 4: Verification

After applying the duly filed application form, the lender will check the purity value of the gold.

Step 5: Approval and Disbursement

After the verification, the lender will approve the loan, and the borrower will get money.

In case the borrower does not pay the loan AMOUNT

1) Penalty Charge: If the borrower does not pay the loan by the due date. An extra penalty charge will be applicable.

2) Reminder Charges/Call

The bank will call and remind you about the delayed payment .A notice is sent to the borrower’s house about the overdue payment.

3) Auction

If the loan is not paid and no interest is given after 15 days of notice, the gold pledge will be placed for auction.

Points to Consider Before Applying for a Gold Loan

⁠lenders credibility

1 Tenure of the Loan

Interest rate and charges

Amount of the Laon

Repayment Methods

Eligibility and Documentation