Gold Loan Or Loan Against Property


Banks and Non-Banking Financial Companies(NBFCs) have been in existence for more than 70 years, and since then, they have been providing financial services for the people in many ways. And obtaining a loan is one of them. An amount sanctioned to the customer with or without collateral on the agreement that the customer pays the money back within a certain period with monthly interest till the term ends is a loan. And there many types of loans: personal loan, home loan, gold loan, property loan and many more. Gold loans and property loans are pretty similar in that they are secured but differ in the asset aspect.

What are gold loans?

This loan is a short term loan. Simply put, the lender grants you money for the gold article you pledge. This loan has been existence even before the birth of banks and NBFCs, and now the loan is legalized, and anyone with a legal gold article(s) (gold-necklaces, chains, bangles, earrings, rings, etc...) and valid id proof can avail of this loan quickly.

Loan against property

Lands, houses etc..,. Loan against property or property loans are secured loans that a customer can avail on pledging any property of his/her. The property can be residential or commercial. 

How do you obtain a gold loan or loan against property?

In this modern technology, everything is possible in two ways: virtual and reality and the same go for loans. Both the loans mentioned above are available both in online and offline modes. Visit the bank’s official website or NBFC and fill up an application form after checking your eligibility criteria. Document submission is the following process in the application. The bank or the financial institutes contact you later for further details, and as an applicant, you have to submit the gold or the documentation for the property depending on the loan you choose. The lender verifies the collateral and approves the loan in a few hours. The principal amount is disbursed soon after that.

Comparison of gold loan and loan against property

1) Documentation: Gold loans have the most uncomplicated requirement of documents, unlike loan against property that requires id proof, income proof, residence proof, employment proof, and the proof of property. The gold loan only requires id proof and gold article(s). Because of this, the processing of the gold loan is straightforward and flexible.

2) Principal amount: The loan amount for both the loans depends on the value of the asset. For gold loan, the banks and NBFCs check their purity and weight. The purity of the gold must be between 18k and 24k. The lenders grant 80% of the gold’s value starting from Rs1500 to a crore in a few banks and NBFCs and an unlimited amount in others. For loan against property, the banks verify the property’s value, so if the place is in some high-end area with all the basic amenities and square feet rate is high in that place, banks and NBFCs grant upto 80% of the asset’s value to a maximum of Rs 5 crore.

3) Tenure: The gold loan is a short term loan. The maximum loan term a bank or NBFC offer is only two years with a minimum of 3 months. Whereas for loan against property, the tenure goes as high as 20 years, starting from 1 year.  But there are few other lenders offering tenure more than that.

3) Interest rate: The rate of interest is the Equated Monthly Installment. A customer will be paying each month till the end of the tenure for the loan amount acquired. The gold loan interest rate starts from 7.5% per annum to a maximum of 20% per annum, and the interest rate for loan against property starts from 9% and goes as high as 25%. Therefore choosing the loan that suits you is highly important.

 Yes Bank Gold Loan is a highly popular gold loan with the best internet rates in the market. The bank also provides loan against property with affordable interest rates.