Blog #ICICI gold loan

Investing in gold has been prevalent since ages and deemed to be the best option over other investments. It provides assistance to the family at the time of financial crisis, because gold loans can easily be availed by pledging the gold. India is one of the largest importers of gold in the entire world, and is also known for their love towards gold. In Indian festivals it is a ritual to purchase gold as it brings prosperity in the family, like in Dhanteras, Makar Sankranti, Gudi Padwa, Akshay Tritiya. This age-old tradition of buying gold is still considered pious by most households.  If someone faces an urgent financial disaster, this asset can generate him cash with minimum obstacles and formalities. 

When a person chooses to get a gold loan the market value of the gold pledged is calculated according to the power per gram market rate of gold on the day of loan application. The stones and gems in the jewellery are excluded from the calculation. Generally the maximum loan that a person can avail is 75% of the market value of the gold in the ornaments depending on its quality. Generally the maximum and amount eligible for an applicant of gold loan ranges from Rs 1000 to Rs 2 crores, where loan per gram is around Rs 2748 to Rs 3359. The people who are eligible to get a gold loan can be within the age of 18 to 75 years.

 Gold Loan per gram based on total weight of ornament, level of the gold purity, past one month average price of 22 carat gold and LTV ratio applied by banks, is calculated by the Gold Loan Calculator. The EMI is composed of both the principal amount of gold loan and the interest component attached to it. EMI Gold Loan Calculator helps to calculate the monthly EMI at the rate of interest and repayment time thereby minimising all the worries of paying debts. EMI depends upon the loan amount which will get higher if the loan amount rises; the higher rate of interest will increase the amount of EMI, and if the loan tenure is high the EMI gets lower.  Though the minimum age for applying for a bank gold loan is 18 years, many banks require the minimum age to be 21 or 23. 

The employment type of the applicant is also another factor to get the gold loan. Salaried employees, self employed, businessman, housewife, senior citizens all are allowed to fetch a gold loan. To meet the working capital requirement, businessmen also get a gold loan as the rates of interest are comparatively low. Homemakers and senior citizens with no income proof and credit score can easily get the benefits of a gold loan by most Banks like Axis Bank gold loan, Gold Loan in ICIC Bank, SBI Gold Loan, HDFC Gold Loan.

The ornaments that are to be pledged with the bank must be within 18 to 24 carats of pure gold. So, the price of a 22 carat gold ornament can be estimated by multiplying the price of a 22 carat gold ornament by a factor of 20/22. The CIBIL score for granting a gold loan is hardly checked but the repayment track record of the debtor may be instrumental in the CIBIL score. Even job stability or business stability is also not a factor for sanctioning a gold loan. KYC documents such as address and identity proof and the gold to be pledged is enough for availing a gold loan.

 Some most significant things from a customer's standpoint are clarity, security and choice of loan product to suit their requirements. There should be no hidden cost that may lead to extra burden on the debtor. The internal system and strategies of the company which assures no malafide activities against the gold pledged, should be transparent to the debtor. The choice of loan scheme must cover the range from high LTV to low LTV with appropriate variations in interest rates.

Also Read:- Different Sub-classes Of Gold Credits 

Banks and Non-Banking Financial Companies are present to provide many financial services, and the most reputed loan is gold loan because of its many advantages.

Features of a gold loan

Loan amount: The bank or NBFC depending on the value of the gold sanctions loan amount. The lender checks for the purity and the weight of the gold article. The purity should be in the range of 18k-24k. The higher the purity and weight, the more the loan amount. Most banks and financial companies accept any type of gold article as collateral. But few financers don’t take gold coins or bars. So 80%of the gold’s value is granted as a loan amount, and the minimum loan amount is Rs 1500 in a few financial institutes. The gold loan per gram is the standard term financiers use to calculate the loan amount based on your gold article.

 Tenure: The loan term of the gold loan is known as tenure. It ranges from 3 months to 24 months in most banks and NBFCs.Some banks even offer up to 4 years as loan terms.

Interest rate: The rate of interest is a percentage of the loan amount availed and has to be paid each month as Equated Monthly Installment(EMI) without default. The interest varies from 7.5%-20%, and it depends on the loan amount and tenure acquired. The interest rate for the ICICI gold loan starts from 9%.

 The processing fee is incurred for the processing and approval of the application for a gold loan. The charge is usually 1% of the loan amount.

Prepayment charges are procured if the applicant closes the loan account before the end of tenure. The cost is NIL in many banks and NBFCs but few charge up to 1% of the loan amount with other tax rates.

Overdraft facility

Another added advantage of availing this loan is the overdraft facility. Using this facility, the loan amount borrowed can be used lie a credit card anywhere, and you can pay the interest amount whenever you wish. But if the lender asks for the interest, immediate payment is required. This facility is used by millions of gold loan customers and has excellent reviews.

 Various purpose of gold loan

Higher education: The amount availed using gold articles can be used to make yourself more knowledgeable and earn a degree from anywhere in the loan. Unlike study loans that can be used only for the tuition fee of the education, the gold loan can be used for other purposes like accommodation, purchase of books, laptop and other necessary equipment.

 Medical emergencies: Gold loan can be used for urgent medical needs. A gold loan is the best financial solution anyone can get during a pandemic or other health issues. Medical loans need documents and hospital bills to grant the loan, but a gold loan only requires essential id proof like a PAN card, Aadhar card, voter ID, and gold article to sanction money.

 Weddings: For marriage celebration and reception parties, this loan can be availed within hours and minimal documents. So even if it is a last-minute requirement gold loan is present to save you. The big day needs all the attention with complete glamorous. You can even use the official website of the bank or NBFC to take out the loan.

Vacations: A time away from reality is a pre-requisite. The money availed using the gold articles is best used by refreshing yourself and treating your family to Goa or Thailand. The loan amount can cover all your expenses, including flight charges and hotel bills. They are highly convenient with incredible offers.

Conclusion

A gold loan is an advantageous loan with flexible repayment options. After availing of the loan as a borrower, you should pay your monthly instalments on time. As the loan is secured, if the lender fails to see timely payments, they have the right o auction your gold.

Must Read:- Gold Loan Secured Loan 

What is Gold Loan?

A gold loan is a loan acquired by keeping one’s gold valuables mortgage towards banks or NBFCs on the value of gold weighs as Gold Loan Per Gram. This loan is a short term secured loan involving collateral. Since 1991, bank and Non-banking Financial Institutions(NBFCs) have started lending loan on gold with less incurred interest rates. This is the only loan that can get approved in less duration of time.

Eligibility Parameters of Gold Loan: There are specific parameters specified by the lending institutions or banks which one has to abide by for availing this loan:

1. The creditor must be of legal age while submitting a loan application.

2. The creditor must be an Indian citizen.

3. A CIBIL Score of 700 or above is requested.

4. The mortgage gold should weigh above 18 carats to avail loan.

The creditor can check his/her eligibility for a loan using the eligibility calculator.

Gold Loan Schemes: There are multiple schemes given to the creditor to avail loan according to their purpose such as:

Gold Loan for Agricultural purposes: This loan can only be availed by farmers or agricultural laborer's against submitting proof of farming land. These loan purposes should be restricted to farming-related activities only. The repayment is due after the yield of crops in this loan scheme.

Gold Loan for Non-agricultural purposes: This loan can be acquired by salaried individuals, businesspeople, homemakers, self-employed individuals, traders, etc., for the purposes like wedding, home construction or renovation, travel purposes, funding education, medical emergencies or financial crisis.

Application Process: The application for a gold loan can be submitted online through the official website of ICICI or app and offline modes by visiting the nearest ICICI bank branch. The offline method is relatively better than online as there are fewer chances of error. Any wrong transactions can lead to financial loss or discrepancy. In offline, one has to visit the bank to complete the application process with required documents and thus has fewer chances of discrepancy. The bank representative will guides you through the whole loan process and solve any queries relating to it. An appointment is scheduled for gold’s purity test, and if you have mortgage gold with you, it is scheduled at that instant after completing the document verification process.

Document Verification Process: The creditor has to submit proof of genuineness where the banks request only KYC documents and two photographs. An identity proof where Aadhar card, Driving license, Voter ID, Passport and residence proof where utility bills, Aadhar card, Passport, Ration Card, Renters agreement can be submitted. A background check is conducted by bank authorities to omit the chances of fraud or forgery.

Purity Test of Gold: The most important step on which the loan approval depends is the purity test. For this test, the creditor has to visit the bank as it is conducted only on bank premises by bank authorities. The gold is assessed for its purity, and impurities present it where its weight the composition is taken into consideration. The loan amount depends on the analysis of this test as per the loan to value ratio. This test is conducted at the scheduled time where the creditor has to come along with the gold, which must be kept as a mortgage. The loan is approved in a short while after this process.

Safety of Gold: The gold is kept mortgage towards the bank by a creditor. This gold has to be analyzed before keeping it as collateral. This gold is sealed in the bag marked with a unique application number to the creditor and stored in bank lockers. The application number is the same as mentioned in the approval letter issued to the creditor on approval of the loan. The bank lockers are present inside a vault in the bank. These vaults are guarded, and security cameras are deployed inside them. The entry inside this vault is restricted only to the bank employees. The approval letter should be kept preserve by the creditor until the end of the tenure period of the ICICI Gold Loan.
Read More:- Gold Loan in Covid-19