Blog #SBI Gold Loan Interest

There are multiple kinds of loans available in the market delivered by many Banks and other financial institutions. Some of them are home renovation loans, wedding loans, travel loans, debt consolidation loans, medical loans, higher education loans, small personal loans, gold loans, car loans, two-wheeler loans, etc. Every type of loan that a person holds must meet the eligibility criteria set previously by the lending institution. This further prevents any future conflicts between the borrowers and the crediting institutions. A Gold Loan is a secured loan against gold ornaments or Bank coins acceptable per the Reserve Bank of India's guidelines where a customer pledges his gold with a bank.

The Gold Loan Rate of different banks vary from each other, but the loan amount provided can be utilised for any personal or business use and even non-speculative purposes. A gold loan taken from a bank or NBFC is better than the high rate of interest provided by the pawnbrokers. All the eligibility norms the lending institution has laid down to give a gold loan to the applicant and are available on the websites of the particular Bank. These factors determine whether a person can compensate the loan to the creditor. The lenders or lending institution decides gold loan eligibility based on factors like credit score, documents, etc.

A gold loan requires some eligibility criteria to be fulfilled. Though different banks' gold loans have different interest rates like Interest rate on gold loan at SBI is reasonable compared to others. Numerous Banks have different eligibility criteria, but the basics remain the same. Among the basic eligibility criteria are age, which must be within 21 to 65 years, and he must possess all required documents. The quality of gold ornaments pledged should be within the range of 18 to 24 carats. Banks do not check job stability or business stability to authorise gold loans as these are secured loans. And therefore, gold loans do not need an excellent CIBIL credit score, unlike other loans. Gold bars, gold coins, gold ornaments and gold articles of any form are accepted by the banks as collateral. The loan amount granted can range a maximum of Rs 2 crore, but some Banks have restricted the maximum loan value to Rs 20 lakhs.

The list of documents that a person needs to give to the bank or NBFC to get a Gold Loan are; identity proof, address proof and income proof, in case the loan amount is huge. Most of the Banks do not require income proof to be provided in case of a gold loan. But some Banks, before sanctioning a considerable loan amount against Gold Loan, may ask for income proof to understand the borrower’s repayment capacity. Submitting only the KYC to establish repayment capacity is enough to enjoy instant approval of secured gold loans from most financial institutions.

Documents required for a gold loan regarding identity proof are PAN Card, Aadhar Card, Passport, Voter ID card, Driving licence, Central or State Government issued photo identity card, photo credit card, defence ID card. For address proof; Aadhar Card, Ration Card, Passport, Bank account statement, Voter ID card, any Utility Bill including electricity bill or water bill or telephone bill of last three months, or letter from any authorised person can be furnished by the borrower. The borrowers may need to furnish other necessary gold loan documents if the need arises. Therefore, most financial institutions must note the complete list of documents required to facilitate the borrowers’ easy approval of gold loans.

There are many benefits of gold loan like- most minor documentation jobs, inhouse gold evaluation, prompt loan disbursal, customer-oriented service, no maximum limit of the loan amount, zero or minimal prepayment and foreclosure taxes, safe customisation and custody of gold kept in solid rooms and speedy customer care service taking short response time. These perks fascinate most people to opt for a Gold Loan.

Also Read:- Avail Gold Loan For business Purpose 

The pledging of the gold articles in a household is expected to increase across the states with the gradual increase in the easement of the restrictions of corona-virus pandemic.This is because the people are strapped for cash to pay for the committed outflows. The corona-virus has affected everyone with its rising rate of infection, number of deaths, and it has forced the people to borrow money and thus, has dragged most of the people in financial debts and crisis. 

Most of the people have also lost their sources of income in this time and therefore, have no other option except of borrowing money. Therefore, a gold loan is in demand right now as everyone can make use of the gold that has been lying in their household from a long time and can fulfill the basic requirements and to consolidate debts in this time of an emergency. 

Also, the interest rate in a gold loan is really lower as compared to the other loans and the amount of loan also depends on the market value of the gold that is being deposited by the borrower. The gold loan rate is really affordable as compared to the other loans. Because of all these reasons, there is a demand of the gold loan in the market and more and more people are bending towards this option because it is the most convenient option to go for.

Benefits of a gold loan -

A gold loan has a lot of benefits that differentiates it from the other loans and makes it one of the best loans available in the market. The SBI gold loan interest is one of the most reasonable interest rates.  

Following are some of the benefits of a gold loan:-

No income or salary criteria:

All the money lenders, before granting a loan to a borrower, require that the borrower has a strong repayment capacity and a stable source of income, so that he is able to repay the loan but it is not in case of a gold loan. A gold loan is a secured loan which means that the money lender or the bank is provided with some security and therefore, there is no need of depositing any income proof when applying for a gold loan. This is because the person is pledging a valuable asset to him i.e. the gold articles in return of the amount of loan.

No need of a good credit score:

As a credit score is one of the most crucial factors in other types of loans, it is not as important in case of a gold loan. As long as one provides his gold articles to the bank or to the money lender, there is no need of having an ideal credit. score or a good credit history. Therefore, a person who is not working or who is unemployed or unsalaried can also apply for a gold loan because the most important thing in a gold loan is the gold that is pledged by the borrower. 

Lesser processing time:

The processing time in a gold loan is comparatively lesser as compared to the other loans. This is because there is minimal documentation and the verification process is also not so long. Therefore, a gold loan can be considered in times of an emergency as it is not a time consuming process. Only a few hours are taken for the processing of a gold loan as the main documents that are required are only the identity proof and the address proof. 

Convenience:

A gold loan is one of the most convenient loans as the only task of the borrower is to provide the gold to the money lender or to the bank and in return, the amount of loan will be disbursed in his bank account within a few hours. A person can get upto a maximum of 80% of the market price of the gold.

Read More:- Gold Loan Calculator takes away your worries of paying debt