Blog #goldloan

About gold loan

It is a secured loan that can be availed at any bank, private institution or NBFC (Non-Banking Financial Companies). Borrowers have to pledge their gold ornament to get funds against it. The entire processing time of a gold loan is significantly less, which makes it an ideal loan to get funds instantly. Customers get the flexibility to use the funds they have borrowed through gold loans freely. Banks don't monitor the end usage of the funds. 

Advantages of gold loan

1. Flexibility: There are a number of banks, private institutions and NBFCs that provide the facility of a gold loan. So customers get the flexibility to compare all the options and then choose the ideal gold load for them.
   
   
2. Documentation:- The entire documentation process of a gold loan is very simple and quick. You have to submit the application form and attach some essential KYC documents required by the bank. You don't have to go through a bundle of paperwork to get your loan application approved.
   
   
3. Credit Score: You can use this loan as an opportunity to increase your credit score. To do this, you'll have to repay all your instalments on time, and you will notice a change in your credit repayment history after some time.
   
   
4. Repayment:- Customers have the flexibility to choose a loan repayment structure and tenure according to their budget, income and repayment capacity. So they can calculate their expenses and then choose a repayment tenure accordingly.
   
   
5. Processing fee:- The entire process of a gold loan is very quick and easy. So banks don't charge for a lot of stuff like processing fees. 

Gold loan online application :

Technology has made too much progress. And during this pandemic, everything is being digitalised. So if you want to apply for a gold loan, you can do it by using the online mode. You don't have to visit the bank's nearest branch and wait for hours to get your turn. You can quickly apply for the gold loan facility from the comfort of your home. Everything is being digital, so you can even sign the documents digitally. A lot of individuals are applying for instant loans from their homes. As it's pandemic and people are really scared to get out of their house. This might be an excellent start to make India Digital. 

How can I apply for a gold loan facility online?

The entire application process of a gold loan is speedy, easy and effortless. 

1. Firstly you will have to visit the bank's online website and read everything about their gold loan facility and the eligibility criteria that is required.
   
   
2. Check if you fit into that criteria perfectly or not.
   
   
3. If you are eligible, then you can move ahead with filling the application form.
   
   
4. Complete all the details required by the bank, and then you'll have to attach some essential KYC documents like Aadhar card, Pan card, Ration card, Electricity bill or other utility bills.
   
   
5. Once you're done with the documentation process, a bank representative will visit your house to measure the gold purity and weight.
   
   
6. Your Gold rate will determine the loan amount you'll receive.
   
   
7. After the gold is valued, the bank will state all the terms and conditions regarding repayment of the loan and Interest Rate on Gold Loan in SBI.
   
   
8. Once you have consented to the document, the loan amount will be disbursed to your bank account instantly. 

Conclusion:- Multiple banks and private institutions provide the facility of a gold loan. To compare all the options available carefully and then make any decisions regarding your gold loan. Check your repayment capacity and then choose structure and tenure according to it.

Also Read:- Golden rules for obtaining Gold Loan 

Gold loans are one of the most popular ways to secure quick finance that has recently gained market attention. But, apart from all these benefits, there are specific golden rules that one should know before applying for a gold loan. So, let us discuss some of these golden rules:

Interest rate: There are various interest rates of gold loans that depend on the lenders and many other factors such as loan amount, loan tenure, LTV ratio, and other factors. For example, if there is a high LTV ratio, the lender will charge a higher interest rate to avoid their risk. Therefore, one should compare the gold loan interest rate from various banks and institutions to get the most suitable.

Processing Charges: Most gold loans have zero processing charges or minimal processing charges that are as low as 1%-2%, whereas some might even charge a fixed percentage and others may charge some percentage of the whole amount of the gold loan it all depends on the bank or lender from whom you are availing the loan about how much fees they will charge, Loan tenure and repayment tenure: The gold loan is a short term secured loan with a flexible tenure that ranges between 3 days to 3 years. This may vary according to different lenders and banks. Banks and lenders offer a variety of repayment options along with the usual monthly instalments mode. Borrowers can choose to repay the principal amount at the end and all the monthly instalments, or they can pay monthly instalments every month and the principal amount at the end of the tenure. A person can even calculate his monthly instalments before applying for a loan by using the EMI calculator to know if he will be able to repay the instalments or not. For example, the EMI system will suit a salaried person with regular monthly income, and the non-EMI system will suit self-employed workers who do not have a fixed source of income per month.

Loan amount: As a gold loan is a secured loan, a gold loan will depend on the gold you pledge as collateral. RBI has chosen the loan-to-value ratio as 75% of the total value of gold that is pledged. Recently this percentage has increased up to 90%. The amount of loan that you will get will also depend on the lender you choose to get it from.

These are some of the golden rules that one should keep in mind before taking a gold loan, as one should make sure that every condition is well-suited for him before taking a gold loan.

Now, it is vital to know all the golden rules and then apply for a gold loan as then it becomes easier to get the gold loan by deciding where you want to take the loan. PNB gold loan is an excellent option to get a loan as they offer terms and conditions that are pretty comfortable, and you can bargain after knowing the golden rules that give you an upper hand. So, these are the benefits of knowing the golden rules; the risk of fraud is eliminated as you can go for the loan as per your terms and conditions.

Various banks and non-banking financial companies (NBFCs) throughout India offer gold loans to their customers at competitive interest rates. However, before a Gold loan applies online, you should be aware of the process, advantages, and disadvantages discussed further in this article.

Here are a few things to remember before taking out a loan against your gold.

Banks vs. non-bank financial companies (NBFCs)
There is one significant distinction between banks and NBFCs. The former has lower interest rates and allows NBFCs to lend more significant sums. How do they manage to do it? They put a higher value on your gold than banks do.

You have the option of paying in equivalent monthly installments (EMI) or just paying interest over the term of the loan and a one-time repayment at the end.. Banks and non-bank financial companies (NBFCs) sell the borrower 75% of the gold's worth. If your gold is priced at $46,500 for 10 grams by a bank, the NBFC will value it higher.

There are also several slight variations. NBFCs that mainly lend against gold, for example, will provide loans quicker because they value the metal in-house. This facility may not be accessible in all bank branches, and they may need to employ a valuer to get it.

Lenders disapprove of gold bars
Lenders consider 18 carats of purity as a minimum. Many lenders would not accept gold that is less pure than this. Also, many lenders would not lend against gold bars. You may, however, pledge jewelry and gold coins. Bear in mind that the lender would not accept the jewelry’s value, whether it contains diamonds or gems. They can only lend money if it is secured by gold.

Charges
Prepayment penalties are not typical among lenders. And if only a few people tax it, it would only amount to around 1% of the unpaid balance. There may also be fees for valuation and delivery. Allahabad Bank Gold loan also charges a negligible amount to its clients.

Return of funds
Depending on the projected cash flows, you can select from a variety of repayment options. You have the option of paying in equivalent monthly installments (EMI) or just paying interest over the term of the loan and a one-time repayment at the end.

Failure to pay
Lenders have the right to sell your gold if you don't pay the loan on time. Besides, if the price of gold falls, the lender can ask you to pledge more gold. The lender would like to keep the loan-to-value ratio constant, which means that the gold they have should be worth more than the money they have disbursed.

FAQs
Do I need to have some proof of income to get a gold loan?
You don't need to request any evidence of income or wages to get a gold loan because banks and non-financial institutions provide a Gold loan to apply online facilities with just a few pieces of identification and proof of address.

Is it necessary for me to be a current customer of the bank to get a gold loan?
To obtain a gold loan, the borrower does not need to be a bank’s current customer. Gold loans are issued based on a gold mortgage. If a Gold loan applies online with your current bank, you can quickly negotiate interest rates depending on your relationship with the bank.

What are the conditions for obtaining a gold loan?
To apply for a Gold loan online, you'll need to identify and address proof such as a PAN id, passport, Aadhaar card, voter id card, and utility bills. Besides providing the required documentation and the gold asset, you must also meet the banks' basic eligibility requirements for granting a loan, including age, occupation, gold value, and so on.

Also read this: REASON FOR INCREASE IN GOLD LOAN 

Benefits of availing of a gold loan -

1. An existing asset can be used - In gold loans, the borrower can use an existing asset, which is rarely used to generate money, to avail of a loan. The gold owned by the borrower can help in obtaining instant cash by serving as collateral and the gold would be back in the possession of the borrower after the loan amount is repaid by them.

2. Repledging - There is no restriction on the number of times an individual can use the same piece of gold to avail of a loan. This would not be possible in the case of loans such as personal loans as that depends on the creditworthiness of the individual.

3. Flexible repayment structure - Banks and other financial institutions provide a flexible repayment structure in the case of gold loans. The borrower has the option to repay the loan amount through equated monthly installments (EMI), advance interest payments, interest payments at regular intervals, or even bullet payment which refers to paying the principal amount and the total interest charged upon it directly at the end of the loan tenure.

4. Low-interest rates - Being a secured loan, the rate of interest charged by banks and other financial institutions on gold loans is lesser than the rate of the interest charged on unsecured loans such as personal loans.

5. No processing fees - Banks and other financial institutions such as IIFL gold loan do not charge any processing fees on gold loans at all while some banks may charge a processing fee, which is usually as low as 1%.

6. No foreclosure charges- Most banks and other financial institutions do not charge any foreclosure charges on gold loans at all and even if some banks may charge a processing fee, which is again as low as 1%.

7. Simple Eligibility - The eligibility criteria of a gold loan is simple, anyone above the age of 21 who possesses gold and all the required documents, be it a salaried employee, professional, farmer, or trader, can apply for a gold loan.

8. Simple documentation - The documentation process involved in gold loans is simple and minimal. Only proofs such as identity and residence are required.

9. No income proof needed - Since gold loans are secured against the gold provided by the borrower, the banks and financial institutions do not require any proof of income from the borrower.

10. Low credit score - Gold loans can be availed by anyone even with a low credit score. Unlike other loans, where the loan is approved based on the creditworthiness of the applicant, in gold loans, the loan is approved based on the purity, weight, and current market value of gold.

11.The flexibility of use - There is no limitation on the use of the amount availed through a gold loan. There is the flexibility of using the funds for any legal purpose. 

12. Fast Disbursal - The eligibility criteria of gold loans are simple and minimum documentation is required and with the assistance of online facilities, the approval and disbursal process of gold loans has become very quick.

13. High LTV - LTV refers to loan to value, banks and financial institutions provide a loan against a certain percentage value of the gold provided as collateral by the borrower. Some banks provide a loan-to-value ratio of up to 75% based on factors such as the purity, weight, and current market value of gold.

Gold loans are a quick way for individuals to meet their urgent financial requirements. It is considered a beneficial and a less risky option because of the low interest, simple eligibility, and various other factors mentioned above. The borrower should assess their financial needs and goals and accordingly decide to apply for a gold loan.

Also read this: Does The Eligibility Criteria Need To Be Fulfilled To Obtain A Gold Loan? 

Gold loans give borrowers a number of options for short-term business capital needs, as well as easy access to banks and non-bank financial companies (NBFCs) that operate in and around the market. The fact that a loan can be obtained over the counter distinguishes it in terms of distribution, encouraging daily borrowing habits that are solely based on need or opportunity. Customers will be able to borrow and repay gold at home on the same day they take out the loan and at any moment during the loan term.

In India, gold, in particular, has a great traditional and emotional significance, hence every household keeps it safe in a bank or bank locker. Similarly, when a borrower takes out a loan with a bank or an NBFC, the storage is free, secure, and completely insured, so most borrowers don't hesitate to use it as collateral ever ready available credit line.

Due to the nationwide pandemic that has been going on for the past six months, we may witness a dramatic surge in retail lending demand. This easy loan product is preferred by borrowers such as traders who want to restart their businesses, small manufacturers/SME who want to start their businesses, the salaried class who want to clear private debts, fund education, or fulfil other lifestyle necessities, and so on. A gold loan looks to be a reasonable option for addressing immediate credit demands in the current circumstances, where all banks and NBFCs have ceased lending due to elevated risk assessments in the epidemic and constrained cash flows in all commercial organizations. 

This is attributed to unanticipated employment losses and decreased end-user demand for specific products or services. As a result, gold prices have risen since the pandemic began to sustain the payment periods of staff, vendors, personal or company overheads. As a result of the price and LTV ratio of the same ornaments by default, clients will acquire extra credit, driving up demand for gold loans.

With the rise in demand for gold loans, Delhi, Gujarat, Karnataka, Andhra Pradesh, and Maharashtra are the primary cities leading the way. Due to the increased demand for gold loans, major states such as Delhi, Gujarat, Karnataka, Maharashtra, and Andhra Pradesh are leading the way. Due to various branches with better market penetration, inactive and just reopened enterprises, and a larger population within a 10-30 km radius, Hyderabad, Bengaluru, Chennai, Pune, Delhi, Rajkot, and Surat have all been key business contributors. Small towns and cities, on the other hand, contribute a greater share of the Gold loan distribution due to cyclical demands and rural catchments that fluctuate with seasonal demand and crop cycles each year.

Banks recognized the gold market and used it as a major source of investment. Many NBFCs only give gold loans. Let us take the example of Yes Bank gold loan, to explain the advantages and ease provided by banks to their customers on gold loan.

1. Regardless of your credit history or the existence of a guarantor or co-borrower, you can receive a Gold Loan from YES BANK with ease.

2. You can simply receive a Gold Loan with us in the event of an emergency by following a simple application process and providing minimum documents.

3. The loan repayment is split into two parts: interest and principal.

4. This scheme allows the principal to be paid in one lump sum at loan maturity and the interest to be paid in EMIs at regular intervals to the bank.

CONCLUSION:
 As a result, it's easy to see why gold loans have been so popular for so long. It leads to you receiving a valued sum that is typically insignificant in comparison to the loan's other stipulations. Gold loans are convenient and flexible, which benefits the customer in a variety of ways.

Read More:- MYTHS ABOUT GOLD LOAN 

Few things need to be focused upon and to keep in mind while availing loan and while being in the process of repayment of the loan and at the end of the loan payment. Each factor is important as it will lead us to go through the smooth functioning of the loan procedure. Proper management of the gold loan in this time of pandemic situation will make us always remain away from any financial risk particularly in April till June where the peak of the COVID 19 is expected to get a declining graph. It will not only help to deal with the present financial crisis but also will help in the financial planning of the future as well. The Factors are as follows-

Time - The time management is one of the vital factors of any type of loan where planning is required. If a person is requiring a loan in about 6 months to go but at the very much time having the marriage of the sister where he will be having the expenses as well. It is advised not to do any kind of financial event like taking out a loan as from the next months onwards the paying of the first installment will start. There will be a clash between the two events so to have an efficient functioning either there should be some arrangement for the 2nd event if both the things are happening at a time or the events should be rescheduled.

Documentation - The documentation is one of the vital parts of the loan procedure. The loan officer will ask for all the required documents which will also include the proof of address and the proof of identity. Any missing document will either make a delay in getting the loan approval or will get the rejection of the loan application. Once there is rejection from a loan provider it is highlighted in their records or in the records of the subsidiaries which will harm further in those companies also to get the loan.

A credit score - It is a fact that there is no credit score required while one is availing the gold loan. On the other side of the coin if there is a low credit score then there is difficulty in getting approval for the loan or even can't get loan also due to the bad score it is reflected that the person is not trustworthy and is not having the tendency to pay the loan on time .this happens in the case of personal loan or the educational loan. In the case of the gold loan, the gold itself acts as collateral where no other things are required and no worry about the credit score is required too.

 
Valuation - The valuation of the gold is done while assessing the total value of the gold by the banks and the NBFCs. It is done to get sure that the maximum of the 90% of the loan amount which a person will get is a loan amount. The valuation standard is the gold loan per gram. So one should look after the proper information of valuation the gold loan is done or not because improper calculation can lead to overvaluing which will result in the overpayment by the customers.

Conclusion :
To conclude we can say that there are few things which are seen like the checking of the rate of interest of the gold loans are different in different banks and NBFCs. Having the lowest interest rate on gold loan will be a great deal. Proper comparison will lead to having a better and good cheap deal of gold loan which will save a lot. Keeping all these things in mind will keep the procedure very smooth
Read More:- Some Rules To Follow While Availing A Gold Loan 

Client Redressal and Grievance Notification Cell have been two of the main regions or perspectives in which Gold credits have worked quickly to evoke shopper certainty to support the borrower slant and permit the clients to develop their obligation capital which would give the drawn-out advantage. Client Redressal has been alluded to as the way toward recognizing the issues and questions looked by the borrowers when they are profiting the advance office from the private banking monetary establishment and permitting the borrowers with a road to report their issues so they can be recuperated and arrangements could be given at a second's moment.

Then again, the Grievance Notification Cell was set up as an announcing and input component for the customers or borrowers where they can appreciate the advantage of giving composed grumblings to the Corporation Bank gold loan at whatever point they are experiencing issues identified with the working of the advance interaction and dispersal and circulation of the advance add up to the borrower which would, thusly, urge them to dispense the imperative advance add up to the various exercises under the ambit of the monetary organization that is being spoken about.

In this way through the setup of such working frameworks, the gold advance offices given by the financial establishment have put forth a purposeful attempt to investigate the issues looked at by the purchaser and upgrade the trust and certainty level of the borrower which looking back would improve venture alternatives and urge the borrower to deliver and procure more from the interaction of speculation. Following methodical systems were initiated to improve client certainty and achieve critical advancement during the time spent delivering credits.

Giving simple portion and reimbursement choices to the borrower

One of the essential systems of how you would have the option to overcome the way that clients would be pulled in to the plan of action just when he finds certain advantages and benefits related to it. Subsequently to make the underlying arrangement of gold advance well known among the majority the private financial business organizations presented the deliberate methodology of simple portions and simple reimbursement choices whereby the borrower would give the chance to take care of the chief measure of the credit in simple portions and part-reimbursement techniques which would not just assistance in isolating the advance sum unmistakably however would likewise be instrumental in achieving liquidity in the market component.

In this manner, Gold Loan has assumed a basic part during the time spent data social occasion and scattering urging borrowers to lean more towards profiting the accessible office.

Building Information Centers to address customer needs

The second most essential capacity performed by the private business banking associations was to set up offices for gold advance provisioning and data focuses where officials would be put to give data on the working part of gold advances and how they have been fruitful in building up satisfactory dispense of credit offices from the money coffers of the financial framework. Data Centers gave an educational status on the various parts of gold credit that would empower the business element to work autonomously and work proficiently along these lines achieving consistency in the work activities and the financial capacities got smoothed out which prompted simple dispense of advance offices consequently joining an effective comprehension of advance offices in the market structure.

Consequently, gold advances through the previously mentioned system have worked as one of the chief instruments of gold advance provisioning and acquired the trust and certainty of the borrower. Gold Loans have accordingly skillfully been successful in giving effective capital rebuilding offices to the borrowers empowering the development of credit conclusion.

Also Read:- Ways To Repay Gold Loan