India is one of the world’s largest consumers of gold. According to the World Gold Council (WGC), annual gold demand in India grew 804% from 1987 to 2016. And it does not look like this trend is going to slow down anytime soon. The precious metal can be used not only for industrial, commercial and investment purposes, but also to obtain a loan in financial emergencies. In fact, the gold loan is one of the easiest and fastest ways to get money when it matters most.
Even if you have a low credit score but have plenty of gold stored in your safe deposit box, the gold loan from the best gold loan company in india may be the right solution for you. With gold loans becoming more popular every year, it’s important to know not only what a gold loan is, but how it works, what the interest rates are on gold loans, and what else is out there and what is the cheapest gold loan in India.
What is a Gold Loan?
A gold loan (also called a gold loan) is a secured loan that the borrower takes out with a lender by pledging his gold items (in the range of 18-24 carats) as collateral. The loan amount is equal to a certain percentage of the gold, usually up to 80%, and is based on the current market value and quality of the gold.
What are the advantages of a gold loan?
A gold loan is similar to a personal loan to meet your immediate financial needs, whether it is for an international education, marriage expenses, to cover medical emergencies, or for any other personal purpose.
Fast disbursement – The minimal documentation required results in faster processing of the gold loan as it is secured.
Flexibility in use – Since the purpose of use is not monitored, you have the flexibility to use the loan for any type of expenditure.
Secured loan type-You do not have to present any collateral to the lender other than the pledged gold jewellery.
Lower interest rate: interest rates on gold loans are lower compared to personal loans because gold serves as collateral.
Liquidate your idle assets: gold is an idle asset that is rarely used to create money. Therefore, a gold loan is the perfect solution to raise capital and use the fund when you need money to meet your financial needs. Besides, it is safer in the safe deposit boxes of a bank or financial institution than at your home.
What are the usual interest rates and processing fees?
Interest rates on gold loans vary from lender to lender and range from 9.24% to 17%. Some lenders also charge a nominal processing fee of 1-3% of the loan amount. It is always advisable to review and compare the interest rate, processing fee, late payment fees, and prepayment penalty with the lender before taking out the loan.
What documents are required to process a loan application?
The documents required to apply for a gold loan vary from lender to lender. However, the general list of documents includes the following: Passport photos, proof of identity (PAN Card, Voter’s ID, Aadhar Card etc.) and proof of address (passport, driver’s licence, utility bill etc.).
Can I foreclose on the loan? Are there any fees involved in foreclosure?
Yes, you can foreclose on the loan at any time. Most lenders do not charge fees to foreclose on Gold loans, but a few lenders charge between 2% and 4% of the outstanding principal. You can always contact the lender to find out what their foreclosure process is.
For what terms can I qualify for the loan?
Gold loans are short-term loans and have flexible terms, ranging from a minimum of 1 month to 5 years or more, depending on the lender.
What should you look for?
Because gold loans are secured by your gold, you should be careful when repaying the loan and take out an amount of credit that you actually need and can comfortably repay. If you default on a loan repayment, it can negatively impact your credit score and credit history and cause future loan applications to be denied.
What happens if I can not pay my debt by the due date?
The action taken against delinquent customers varies from lender to lender. Some lenders charge interest on late payments, which is usually higher than the interest rate a customer pays on the loan. If you continue to be late with payments, you will receive a reminder giving you a deadline by which you must meet your obligations. In the event of non-payment of the loan by the final reminder, lenders may also auction your gold items to collect the outstanding loan amount.