GOLD LOAN GUIDE

FEATURES OF A GOLD LOAN: -  

The features of a gold loan can be summed up in the 

following points: -

• PURPOSE- You can avail a gold loan to fulfill your financial needs like for medical emergencies, educational purposes, for a vacation, for a wedding, etc.
  
  
• SECURITY- The gold that has been pledged by you with the financial institution or the bank or the money lender acts as a collateral or security against which the amount of loan is provided.
  
  
• TENURE OPTIONS- The tenure for the repayment of a loan can range between 3 months to 36 months.
  
  
• FEES- The charges and the other fees that are applicable on a gold loan are - late payment charges, processing fee, valuation fees, non-payment of interest, etc.
  
  
• REPAYMENT OPTIONS- There are different repayment options available that are offered by the money lenders to the borrowers.
  
  These are as follows: -

1. Repayment of loan in Equated Monthly Installments (EMI).
   
   
2. Payment of interest upfront and then, the repayment of the amount of loan at the end of the tenure of repayment.
   
   
3. Payment of interest every month and then, the repayment of the amount of loan at the end of the tenure of repayment.
   
   

• REBATES- Most of the lenders offer discounts on the existing interest rates on the gold loan, if the borrower repays the existing EMIs on time. This rebate can go upto 2% on the original interest rate.
  
  
• SAFETY- The gold that you will deposit to the bank or to the money lender as a collateral or security to the bank is absolutely safe. You do not need to worry about the gold that you have deposited. Your gold will be kept in a safe place. And after the successful repayment of the loan, the gold that was deposited by you as a security will be given back to you.

DOCUMENTATION: - The documents that a borrower needs to have while applying for a gold loan are as under: -

• Two passport size photographs.
  
  
• ID Proof- Driving License, PAN card, Passport copy, Aadhaar Card, Ration card, Form 60, etc.
  
  
• Address Proof- Driving License, Voter ID, electricity bill, Ration Card, Passport copy, registered lease agreement not older than three months.

BENEFITS OF A GOLD LOAN: - 

• MINIMAL DOCUMENTATION-  Most of the banks offer a simple documentation process as it is easy both for the borrower and for the lender too. The borrower needs to submit only the necessary documents and there is no need for any income proof. SBI gold loan ensures minimal documentation.
  
  
• WAIVER ON FORECLOSURE CHARGES-  Most of the banks does not levy any foreclosure charges on the loan after a minimum time period. So if a borrower wants to foreclose a loan, he can pay off the entire amount without paying the foreclosure charges.
  
  
• LOW INTEREST RATES- The interest rates on a gold loan are lower as compared to the other loans. This is because the borrower provides a security to the bank so, the rate of interest is low in a secured loan.
  
  
• FLEXIBLE REPAYMENT TENURE- The minimum tenure for the repayment of a gold loan is six months and the maximum tenure for the repayment of a gold loan is 24 months. However, a borrower can choose the tenure according to his needs. You can also get a high maximum LTV (Loan to Value) ratio of 75% of the weight of the gold that was calculated.

CONCLUSION: - When a person is in need of instant funds, the most safest option is to avail a gold loan. He can make use of the gold that has been lying in his cupboard for ages with no use. He can use it to cope up with the situation and after attaining the loan, he has to repay the amount back with interest. After the successful completion, he can get his gold back too.  The gold loan interest rate is also really low as compared to the interest rates on the other loans. Therefore, it is an affordable option to apply for a gold loan. The main important thing in this loan is the purity of the gold.