Gold Loan For Beginners

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Gold loan features

Loan amount: Banks and financial institutions offer about 80% of the gold’s value after it is verified of its purity. In urban areas, most banks give a minimum loan amount of rs.10,000 whereas in a few of the rural Gramin banks it is rs.25,000 and as for the maximum many banks offer you as high as a crore.

Minimum documents required: The paperwork amount is minimum to avail a gold loan, all you need is your ID proof, residence proof, and agricultural land proof if you are a farmer.

Collateral: Till the loan is closed the gold articles you provide act as the collateral.If the loanee doesn’t pay the interest regularly, the bank has the right to auction your gold.

Tenure: Banks and financial institutes offer a minimum time of 3 months to 6 months.The maximum tenure they offer is up to 4 years, however, in most banks, it is only up to 2 years.

Processing fee: While NBFC’s wave processing fees, banks procure a processing fee of 1% of the total loan amount or rs 1000 whichever is high.

Interest rate: Interest rates for gold loans vary from bank to bank, but in general it is in a range of 7.5%-14%. Banks and financial institutes offer a much lesser interest rate than the normal range, but to acquire that you have to produce agricultural land proof.

Things you need to know to avail of gold loan

Gold Purity: The gold article you produce should be about 18-24k, many banks don’t accept gold coins as collateral, therefore you should verify it with the bank beforehand.

Bank choosing: You have to do a background check on the bank before you take a loan, ensure that it is a safe, authorized financial institution and that they keep your gold articles with utmost care. You also have to verify the loan amount they can offer and its interest rate, Which should be minimum.

Overdraft facility: Self-employed and salaried personnel can avail of this facility in the gold loan scheme.it acts like a credit card, where you can withdraw the money you borrowed anywhere and anytime without any prepayment charges. You don’t have to pay the money in Equated Monthly Instalments(EMIs)you can pay it whenever you like but if the lender asks for repayment, you have to offer it immediately, if not they may charge a very high-interest rate.

Loan schemes: Most banks and NBFC’s offer two types of payment schemes. You have to decide which one that is best for you. Bullet payment scheme and Equated Monthly Instalments. A bullet payment scheme or balloon loan in colloquial terms is a scheme where you pay the principal amount and the monthly interests on the whole at the end of the tenure, whereas in EMIs or partial payments, you pay the interest month-by-month and the principal amount at the end of the tenure. The third scheme, which is used by very few financial institutions, is partial payments, here you pay a partial amount of the principal and the interest each month. This scheme is relatively expensive. The gold loan calculator gives you a thorough knowledge about the interest rates and the cibil score.

Inflation rate: Inflation rate is the falling value of the currency, which increases the loan demand, thereby increasing the interest rate, when considering the interest rates, you have to consider the inflation rate too.

Conclusion

IIFL Gold Loan is a safe and secure loan compared to personal loans. At times like Covid, the gold articles act as investments and come in handy. today home pick-ups are available, banks arrive at your home, collect the collateral and offer the money. You can check your loan status online and pay interests and the amount via online modes. They are flexible and easy for beginners. 

 

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