Key Facts about Gold Loans
To know more about Gold Loans refer to the key facts explained below:
Loan Amount: The borrower can borrow a minimum of 1,000 as a Gold Loan. However, the amount of loan entirely depends on the value of the gold pledged as collateral with the lender.
Shorter Loan Tenure: A Gold Loan ranges from 6 months to 5 years.
Fixed Rate of Interest: The lending institution charges a fixed rate of interest on Gold Loans. The prevailing Gold Loan rate of interest is 8.96%.
Quick Loan Disbursement: The turnaround period for a Gold Loan is short as compared to any other loan type. Usually, a Gold Loan is disbursed within an hour of the submission of all the required documents and the said gold.
Collateral or security: To obtain a Gold Loan the borrower has to pledge gold ornaments or gold coins as collateral with the bank or the other lending institution.
Loan Repayment: A Gold Loan can be repaid via fixed Equated Monthly Instalments (EMIs).
Pre-Payment: The banks and other financial institutions facilitate the pre-payment of a gold loan. However, banks and NBFCs charge pre-payment charges that may go upto 5% of the outstanding loan amount.
Documentation: The documentation involved to take a Gold Loan is comparatively lesser to another type of secured loans.
Loan To Value: The loan amount varies on the basis of the value of the gold. However, the loan to value may go up to 75% of the gold value.
Processing Fee: The lending institution charges a minimal charge as processing fee that can go up to 2% of the total loan amount.
Gold Forfeiture in case of failure in the repayment of loan amount: In case the borrower fails to repay the loan amount to the lender, the lender forfeits the pledged gold and after melting auctions it within 18 months. However, in some cases, the banks may wait for a relevant period before auctioning the gold in the market.
Loan Guarantor: Unlike another type of loans, no guarantor is required for a Gold Loan.
