Many people in India own gold as it is considered as a symbol of success and fortune. Often people do not use gold ornaments regularly and they are kept at home or in bank lockers for safety. But instead of keeping the gold ornaments there, you can mortgage them to a bank or an NBFC and get a loan against them with special interest rates. Keeping your gold ornaments as collateral for loan is known as ‘Gold Loan’. In India, the concept of gold loan is getting popular day by day as it has its special benefits and features. But before applying for gold loan, make sure you know the following things…
- Loan Amount Granted:
Many banks and NBFCs offer quick loan against gold. But the amount granted is up 85% of the gold value. They decide the amount on the gold’s purity, market price of gold and its karats. No one offers 100% amount against gold.
- Secured Loan:
Gold loan is a type of secured loan. Here gold itself is kept as collateral. The gold which you keep in banks as collateral is kept very safely in bank lockers. So you do not need to worry about its security. It remains with lender until you pay off the loan in full.
- Purity Level Requirement Of Gold:
The loan amount granted by banks and NBFCs changes as per the quality of the gold. The gold has to be pure and minimum 18 karat gold is required to take a loan against. More karat gold helps you to get more amount of loan.
- Type Of Gold Accepted:
Banks and NBFCs accept only old ornaments in case of gold loan. No one accepts gold bars and very few lenders accept gold coins. Getting a gold loan against pure gold ornaments is much easier.
- Loan Against Gold Only:
Banks and NBFCs give loan against only gold. If the gold ornaments you are keeping as collateral, contain precious stones, the loan amount is still determined on only gold not the precious stones.
- Repayment Options:
Banks offer extremely flexible and many times customized repayment options. Borrower can start by paying interest rate and pay the principal amount at the end of the tenure. Also the borrower can make pre-payments in a few installments. Tenure of gold loan ranges from few days to few months. Some lenders offer a tenure period for years but it totally depends on the lender’s policies. Gold loan interest rate starts from 10.50% *. These are the lowest interest rate available.