What is an gold loan?
Gold loan is a method of availing a loan by pledging your gold necklaces, gold coins, bangles, earrings, bracelets and so on. Gold which is pledged should have purity of 18-24 karat and not have any impurities. Please note here that by pledging your gold you don’t sell it to the bank, once you pay of your loan amount with the interest you get back the gold.
Gold loans help you meet your short-term requirements, both personal and business related. Best part about gold loan is that you can avail it even if you credit score is low.
Why avail gold loans?
Gold loan has a flexible tenure and ranges anywhere between a few days to 4 or 5 year.
In NBFC’s, the loan is given on the same day. However, banks provide the loans within 2 or 3 days as Gold loans have minimal documentation
You get an LTV (Loan to value) ratio of 75%, which means for every 100 Rs you pledge, you get 75 Rs as loan
Repayment options in gold loan:
- Repayment in Equated Monthly Installments (EMI)
- Payment of interest upfront and repayment of the principal loan amount at the end of the loan tenure
- Payment of interest on a monthly basis and repayment of the principal loan amount at the end of the loan tenure
Safety of the gold pledged:
Gold is kept safely in vaults with electronic surveillance technology
Banks insure the entire value of gold.