Gold loan for a car purchase

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The money borrowed from the banker using gold doesn’t have specifications; the banks and NBFCs don’t question your intentions. And availing the borrowed money for buying a car is purposeful. 

Eligibility criteria:

  • Anyone between the age of 18 and 75 can avail the loan.

  • The purity of the gold should be between 18k-24k; the more the purity of the gold, the higher your loan amount.

  • Citizenship of India to avail loan against the loan in India.

  • Required documents like ID proof, residence proof, signature proof.

Advantages of gold loan

  •  Quick processing: Availing a gold loan is the easiest process. And it requires collateral, therefore includes very fewer documents and lenient eligibility criteria, making the disbursal process fast and neat.

  • Processing and foreclosure charges: The processing fee is the charge banks and Non-Banking Financial Institute for the processing of the application and is usually NIL in most banks and NBFCs very few charges and even then it is only upto 1% of the loan amount. And foreclosure/preclosure charge is the amount for the repayment of the loan amount sooner than the original dates, which banks and NBFCs charge for most loans, but in the case of a gold loan, it is flat free.

  • No income proof: unlike most other loans that bankers offer, a gold loan doesn’t need proof of income to avail this loan in most banks and NBFCs like SBI gold loan, which grants upto Rs. 50 lakhs with a minimum of Rs.20,000.pe.

  • Low-interest rates: Compared to other unsecured loans such as a personal loan, a gold loan offers only the minimum interest rates, and most banks lower their interest rates further even if there is an additional asset.

Why is a gold loan for a car purchase better than a car loan?

Loan amount: Banks and financial institutes offer up to 90% of the loan amount, so if your asst is more and values much, you can cover the whole cost of availing a car plus the additional maintenance cost and the amount for a parking garage in some cases if the loanee doesn’t have a place to park the car, which the car loan’s principal amount might not cover.

Document requirement: As mentioned before, availing a gold loan for a car only requires the basic documents, which save you a lot of time in the verification and approval process, whereas in a car loan, you need additional documents like car quotation, income proof, tax return prof etc.. which makes the processing time long.

Interest rate: Banks and financial institutes offer low-interest rates for a gold loan than many other loans as it is a secured one. And in comparison to car loan where the minimum interest rate is 10.25%p. Gold loans are far better.  

Tenure: Gold loans only offer minimum tenure, whereas car loans offer tenures upto 12 years. On the outside car, loans may seem better as they’re offering more time, but if considered carefully, car loans offer more tenure with high-interest rates, and gold loans offer less tenure with low interest rates. So if we compare the total amount we’ll be paying, you can see that a gold loan gives you a better deal.

Depending on the gold rate, the bank’s and financial institutes loan amount for a gram might differ. For example, the average rate they offer for a gold per gram in 2021 is Rs. 3,520 to Rs 4,621 

Conclusion: The bank or financial institute has the right to auction your gold articles if the loanee misses the monthly payments or makes trouble. So it is necessary to pay on time EMIs and maintain your credit score.

 

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