Pledging gold to avail loan has become an extremely popular practice in India. You can pledge your gold jewelry either with the bank or NBFC to avail of funds instantaneously. Availing of gold loans through lenders like ICICI bank gold loan, PNB Gold loan or SBI Gold loan is very simple, stress-free, and hassle-free in nature. You can avail it through the online mode in simple steps.
However, like all other loans, thorough knowledge is important before you enter into any financial agreement. For instance, suppose you take the decision of opting for an ICICI bank gold loan, then you must consider negotiating for a lower ICICI bank gold loan interest rate to get the best deal possible.
Unraveled here is the nitty gritty linked with the gold loan so that you can make an informed decision.
Who qualifies for a gold loan?
To qualify for a gold loan, you must fall in the below-listed criteria –
Employment nature – You must be either self-employed or salaried to qualify for the gold loan.
Age limit – To avail of a gold loan, your age limit must be anywhere from 21 to 60 years of age.
What are the important documents you require to apply for a gold loan?
When compared with other funding options, the documents required to get a gold loan is minimal. In such loan types, you need a specific set of fundamental documents as listed below –
Proof of identity (anyone as per your requirement) –
∙ Aadhaar card
∙ PAN card
Present address proof (anyone as per your requirement) –
∙ Credit card statement
∙ Gas bond paper with a current receipt
∙ Rent agreement along with latest electricity bill
∙ Aadhaar card
∙ Driving license
∙ Address updated in bank passbook or bank statement
∙ Voter ID
What are the important documents required for a gold loan?
∙ Pledged gold articles
∙ One canceled cheque
What gold type do you require pledging?
Just the jewelry form of gold articles is acceptable by financial institutions. Any other gold form like bars, coins, biscuits, or utensils isn’t accepted. Also, note that the higher the gold purity, the higher would be the valuation and loan proceeds. The gold purity must range anywhere between 18 and 22 karats or more. If the jewelry, you pledge is studded with stones or gems it would not be factored in for valuation. Only the gold’s value is considered.
Also Check: ICICI Bank Gold Loan Interest Rate
What is the gold loan rate of interest?
As a gold loan is backed by gold securities or assets, the interest rate levied on such loan options is comparatively lesser. The interest rate for distinct loan proceeds is given below –
If you go for the monthly repayment, the interest rate levied in this case is mentioned below –
|Loan proceeds||Interest rate|
|Between 20k and 25 k||1.33 percent per month|
|Between 25k and 5 lakhs||0.89 percent per month|
|5 lakh and above||0.89 per cent per month|
In the scenario of one-time repayment, the interest rate levied is 1.58 percent.
What is the gold loan repayment tenure?
The gold loan repayment tenure is of six months, and it could be renewed for another six months without renewal fees. As gold loan repayment tenure is short, you must ensure to be able to repay the loan on time. You might lose out on the pledged gold assets if you fail in repaying within the agreed-upon time.
How much loan proceeds can you get?
Lenders determine the loan proceeds after checking out the purity and weight of your gold. They do so by computing the LTV (loan to value) ratio. Most lenders provide loans with a value of as high as 75 percent of the pledged market value of gold. For instance, if the value of your gold is Rs 1 lakh, then the loan proceeds that the lender would sanction cannot be over Rs 75,000.
How can you make your gold loan repayment?
Under a gold loan, you are provided multiple repayment choices. There are 4 kinds of repayment ways using which you can repay your loan proceeds. These include –
The option allows you to repay your loan in simple EMIs, which involve both the principal and interest constituents.
In this kind of option, you can make repayment of your interest and principal constituent according to your affordability and convenience. This method assists you to save on the interest constituent.
Only the interest EMI
In this method type, you can select to make payment of your interest during the loan repayment tenure and repay the entire principal constituent by the end of the repayment tenure when the loan matures.
According to the repayment structure, you need to repay the whole loan proceeds along with interest and principal constituents by the end of the loan repayment tenure only.
How long it takes to process a gold loan?
The procedure of applying for gold is simple and fast. If you have all the required documents in place and you need to meet the lender’s eligibility parameters.
Whom must you approach for a gold loan? Bank or NBFC?
As both NBFCs and banks provide a gold loan, you might find it tough to select an NBFC or bank for a loan. It entirely depends on your requirements and needs. If you want to benefit from features like repayment flexibility or require cash against gold that too under less time, then selecting an NBFC would be a wise choice. As lenders generally come up with lengthy documentation procedures, it makes the disbursal of loans an extremely time taking procedure.
Next, lenders do not pay using cash for loan proceeds approved by them. All the processed loan proceeds are transferred to your account either by account transfer or cheque as desired by you as a borrower. Cash best works best when you require a small number of funds. So, before you avail gold loan, ensure to go through the terms and conditions to make an informed decision.