Gold is appreciated not only for its ornamental worth but also as an unmatched form of investment and savings. Loans have helped people in financial difficulties for years, and there are various types of loans available depending on your needs. The gold loan is one sort of loan that is rapidly gaining popularity as Indians’ love for gold is never-ending.
Why gold loan?
In India, a gold loan is easy to obtain; anyone with idle gold in the form of jewellery can pledge their gold to receive financial aid. A gold loan is a convenient way to get money without having to sell your long-term investments. Many banks offer gold loans instantly once the KYC and documents are verified.
Gold loan interest rates
|Bank / NBFC||Gold Loan Interest Rate||Processing Fee|
|Bank of Maharashtra||7.00%||Rs.500 to Rs.2000 + GST.|
|Punjab National Bank||7.00%||0.75% of loan amount|
|Punjab & Sind Bank||7.00% to 7.50%||Rs.500 to 10000 max|
|Union Bank||7.25% to 8.25%|
|Canara Bank||7.35%||Rs.500 to Rs.5000|
What are gold loans?
According to the HDFC Bank website, “As Gold Loans are secured loans, a bad credit history will not influence your chances of getting a loan. Price fluctuations of gold will also not affect your loan. You can get back your gold assets in the same weight and state once you have paid off the principal amount along with the obligatory interest.”
Documents required for gold loan
According to HDFC bank, these are the documents required
- Submit any one of the following:
- Passport (Not expired)
- Driving license (Not expired)
- Voters’ ID Card
- Aadhaar Card issued by UIDAI
- PAN (Permanent Account Number) Card (along with any of above mentioned documents) or Form 60
- One Passport Size Photograph
- Agri Allied Occupation Documentation ( in case of bullet repayment for agriculture customers)
What is bullet repayment?
You must repay both the interest and the principal amount at the conclusion of the loan’s term under a bullet repayment plan. According to HDFC bank website, “The interest on the loan is calculated each month but becomes payable only at the end of the gold loan tenure. Since you repay the loan in a single shot, this form of repayment of gold loan is called a bullet repayment plan.
Which ornaments or coins that can be pledged for gold loan
According to Kotak Mahindra bank FAQs, “Only acceptable gold ornaments from 18 to 22 karat and only bank minted coins (24 Karat) up to 50 gms per customer can be funded. Non funded items / articles such as Hair pins, Cufflinks, Gold watch, Gold strap, Gold idols, Gold utensils, jewellery with more than 50% deduction, Thread mangalsutra, White gold, Diamond jewellery, Imitation jewellery, Ginni, Gold bars cannot be accepted.
Gold loan repayment mode
According to SBI Bank, the following methods can be used to repay a gold loan.
Gold Loan EMI based: The repayment of Principal and Interest will be commenced from the month following the month of disbursement.
Liquid Gold Loan: Overdraft Account with transaction facility and monthly interest is to be served.
Bullet Repayment Gold Loan: On or before the term of the loan/ on closure of account.