What is gold loan ?
- The collateral for a gold loan is the borrower's gold valuables. The borrower uses this collateral to secure a short-term or long-term cash loan from the Reserve Bank of India. They apply for a loan up to 90% of the current market value of the gold they want to pledge as collateral. The value of the gold that can be pledged ranges from 22-24 karats.
- A loan against your valuable gold in any physical form is known as a gold loan. In a gold loan, gold acts as collateral for your cash needs. The prepayment period or gold loan tenure varies from one institution to another. It is usually 3 to 12 months long. Some lenders allow you to extend the tenure or renew it to extend it, so make sure you repay the loan amount on time. If you default on your gold, you can lose your gold items forever.
- A gold loan is a secured loan where jewellery is used as collateral. The amount of money that will be supplied will depend on the value of the gold. When you take out a loan, you must hand over your gold jewellery and receive it back once the entire loan amount has been paid back. Because collateral is being provided, the loan can be obtained at a low interest rate.
- When taking out a loan, an individual satisfies one objective by using the money supplied. In contrast, when a bank lends money against gold, it offers a multitude of options to the borrower. The gold pledged may be used for personal purposes other than investment, including purchasing a car, schooling, marriage, or other expenses.
- Gold loan is a short-term loan offered against the pledge of gold ornaments with a purity of 18 karat to 22 karat. Gold loans can be used for agricultural, educational, business, medical and other personal needs. You need to be a major (21 years or older) to apply for a loan on gold. The jewellery you are providing as collateral should be of at least 18 carat purity or higher. Jewellery of anything less than 18K gold is not generally accepted. There is no other requirement when you apply for a gold loan.
- Gold loans are among the easiest of ways to raise credit, as they are considered a secured loan, unlike a personal loan, which is unsecured. One can approach a bank or a jewellery store and get a loan of up to 75 per cent of the value of the holding, based on the current price of gold.
- Also, when banks and lending institutions would be unwilling to extend unsecured loans because of fear that they could turn bad, they are unlikely to refuse a gold loan.
- That said, as with any other loan, here are a few things you should know before taking a gold loan, so that you get the maximum out of your gold loan and are able to pay back the loan in due time, and get your gold back.
- It’s a kind of loan you get against your gold ornaments. What this means is that, you can pledge your gold and get a sum of cash in return for it. But this doesn’t mean that you’ll never see your gold again. You get your precious ornaments back the minute you pay back the entire loan amount.
- Gold loan tenures depend on how long you want the loan for. Usually, the minimum tenure is 3 months, and the maximum is 24 months. For more gold loan information about the tenure, contact your local bank.
- Your loan amount will be charged against the value of the actual gold in the asset, so make sure the lender you choose is reliable. Avoid getting a loan from jewelers or small businesses, as they may be unregulated and may offer poor terms and conditions.
