What is Gold Loan?When a customer pledges gold (including jewelry, ornaments and bank-issued coins) as collateral for taking out a loan, it is known as a gold loan. The lender uses the gold as security against payment default. The customer can get a loan amount that is a certain percentage of the value of the gold that has been pledged.A gold loan is often considered a good option because it is a simple application process and is characterized by quick sanctions and disbursal if approved.
Why Choose a Gold Loan?A few reasons for the popularity of loan against gold are as follows:
- Gold loans feature a low interest rate as compared to most other loan options.
- Gold Loans tenure ranges from a few days to 5 years or more depending upon the lender.
- The repayment options on the Gold Loan can be selected as per the choice of the borrower.
- In most cases, the lender does not charge a pre-payment penalty on gold loans.
- Minimal documentation required and PAN Card is not mandatory for this loan.
- Fast disbursement i.e. loan is provided within a few minutes to a few hours.
Types of Gold LoanGold Loan Schemes can be categorized based on the purpose of lending. Banks usually offer lower rates of interest for agricultural gold loans which are offered to farmers and people engaged in agriculture for meeting their farming expenses.
- Agricultural Gold Loans: These are loans extended to farmers and agriculturists against gold ornaments to provide them finance for crop production expenses and investment purpose in agriculture or allied agricultural activities. Key Features of such loans are:
- Evidence of farming activity in the form of proof land records is required.
- Written undertaking by the borrower on the purpose for which he intends to use the loan is required. Banks may also monitor the end use of such loans.
- Loans extended for agriculture are categorized under priority sector lending and are eligible for interest subvention scheme from the government, which reduces the interest cost to the borrower.
- These loans are allowed generally for a maximum period of 3 years.
- Some banks also offer the option of overdraft facility on such loans.
- The interest rate on agricultural gold loans ranges from 8.00 to 10.00 %.
- Non-Agricultural Gold Loans: Loans extended to all other categories of borrowers excluding farmers and agriculturists are known as non-agricultural gold loans. These loans are available to all individuals including salaried, self-employed professionals, businessmen, women, females, housewives, students, retired officials who own gold and want to pledge the same to get a loan. The features of non-agricultural gold loans have been explained under the loan schemes by repayment options.
Features of Gold Loan- Purpose: You can avail of a Gold Loan from any available lender to finance various needs, such as for educational purposes, medical emergencies, going on a holiday, and so on.
- Security: The gold that has been pledged with the bank or the financial institution acts as the security or collateral against which the loan amount is provided.
- Tenure options: The tenure options can range from a minimum of 3 months to a maximum of 36 months.
- Fees: The other fees and charges that might be applicable on a gold loan are – processing fee, late payment charges/ penalty for non-payment of interest, valuation fees, etc.
- Repayment Options: There are three main options offered by lenders to borrowers for the repayment of a gold loan. These are:
- 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 every month basis and repayment of the principal loan amount at the end of the loan tenure.
- Rebates: Several lenders offer the option of a discount on the prevailing interest rate on the loan against gold if the borrower repays the interest regularly. This rebate can be 1% – 2% off on the original rate of interest.
Benefits of Gold LoanA gold loan lends immediate help in times of emergencies as it helps an individual get cash within a day. The loan can be used for any of the following purposes and more:
- Gold loans can be taken to fund the education of children.
- Allows you to utilize your jewel holdings in times of urgent expense requirements and emergencies.
- When a medical emergency strikes, a gold loan can be a savior.
- Gives the sense of using an own asset to finance your needs.
- Low interest cost compared to personal loans.
- Easy loans with no income proofs and no CIBIL checks required.
- Also allows first time borrowers and borrowers with bad credit to get loans.
- Helps improve CIBIL score, as timely repayment is recorded in your CIBIL reports.
Gold Loan ProcessThe following steps are involved in a gold loan process.
Step 1: The purity of the gold is checked based on which the loan amount is decided.
Step 2: The market rate of gold per gram is checked and the rate of previous day is taken into consideration.
Step 3: Loan to Value (LTV) is decided at this stage. The maximum LTV value set by the RBI is 75%.
Step 4: Once you have acknowledged the loan amount and terms, the lender processes the application. The processing fees and other charges are deducted from the loan amount.
Step 5: After signing the final agreement, the gold loan amount is disbursed to your account.
ICICI Bank loans against gold jewelleryICICI Bank offers loans against gold jewellery with a simple and easy documentation process. In return, the customer is required to pay interest on the loan amount. The Gold loan you avail can be used to fund your business, for the down payment for the purchase of property or automobile, education of your children, medical emergency, holiday, agriculture needs, etc. Here is more information about the ICICI Gold loan interest rate, minimum requirement and tenure.
SBI Bank loans against gold jewelleryGold loan is a type of secured loan where one pledges their gold articles to avail loan to meet their short-term credit and SBI Gold loan can be availed by anyone who is 18 years with the steady source of income. It comes with low interest rate and minimal documentation. Continue to read to know more about the SBI gold loan interest rate and schemes it offers.
SBI Gold loan can be availed by anyone who is 18 years and above with a steady source of income by pledging their gold ornaments and gold coins sold by banks.
| Parameters | Details |
| Interest Rate | Parameters Details
Interest Rate All variants: 9.15% (1.25% above the MCLR 1 yr.)
Realty Gold loan: 8.40%
Rural gold loan: 9.95%
|
| Loan amount | Rest 20,000-Rs 20 lakh |
| Processing fees | Processing fees 0.50% of the loan amount +applicable GST |
| Repayment Period | Repayment Period Gold loan & Liquid gold loan: 36 months
Bullet repayment gold loan:12 months
Multipurpose gold loan(Rural)-12 months with overdraft valid for 3 years
|
Federal Bank loans against gold jewelleryFederal Bank gold loans could be the simplest and safest way to secure funds for your immediate needs at attractive interest rates. With minimal documentation and secure storage , Federal Bank gold loan is a viable option to get funding quickly. The funds thus secured from a gold loan can be used for weddings, education, business expansion , and other similar purposes.
Dhanlaxmi Bank loans against gold jewelleryDhanlaxmi Bank gold loans could be the simplest and safest way to secure funds for your immediate needs at attractive interest rates. With minimal documentation and secure storage , Dhanlaxmi Bank gold loan is a viable option to get funding quickly. The funds thus secured from a gold loan can be used for weddings, education, business expansion , and other similar purposes.
- Interest Rate: The interest rate on Dhanlaxmi Bank gold loan starts from 13.50%.
- Storage: The gold jewels provided to the bank as collateral are stored safely in the bank’s locker and you can get it back after the entire loan repayment.
- Gold Loan Amount Per Gram: The gold loan per gram ranges between INR 1755 to 2145 and is subject to change based on the purity of the gold and market prices.
Manappuram Bank loans against gold jewelleryManappuram Finance Limited is a non-banking financial company that offers a range of services which include vehicle finance insurance, gold loans, distribution of mutual funds, foreign exchange services , and other financial products. In terms of gold loan, Mannapuram offers the highest loan to gold value ratio to those who wish to avail the maximum amount of loan against their gold jewellery.
Common Eligibility Criteria Gold Loan If you wish to avail of a loan against your gold jewelry or ornaments, you should ensure that you meet the eligibility criteria specified by the lender. Keep in mind that the eligibility criteria will vary from lender to lender.
The generalized eligibility criteria:
● The applicant should have attained at least 18 years of age.
● The individual should have gold ornaments or articles that can be pledged.
● Lenders will require the gold that is to be pledged to be 18 carats or above.
● The applicant should be creditworthy.
HDFC Bank Gold Loan EligibilityA person looking to avail of a gold loan from HDFC Bank must own the gold he/she is about to pledge, should be 21 years old at the time of gold loan application.
The end use of the gold loan could be for personal use or business needs like expansion, the opening of a business branch, purchase of office equipment , etc. The gold should not be used for speculative purposes, like buying land, capital market investment, purchase of gold, or any illegal purpose.
Axis Bank Gold Loan Eligibility- The applicant should be aged between 18 years to 75 years to avail of the gold loan from the bank.
- The borrower must have gold in any form such as jewels, ornaments ,etc.
- You can avail of a Gold Loan up to Rs. 25,00,000 for a tenure of your choice between 3 to 36 months.
Allahabad Bank Gold Loan Eligibility- The applicant should be aged between 18 years to 70 years to avail of the gold loan from the bank.
- The borrower must have gold in any form such as jewels, ornaments ,etc.
Manappuram Bank Gold Loan EligibilityAnyone over the age of 18 and owns gold ornaments can avail gold loan from Manappuram. The gold jewellery you are submitting should be within the range of 18K to 24K to be eligible for a gold loan.
Muthoot Bank Gold Loan EligibilityAny Indian above 18 years of age can borrow money by providing gold ornaments and the prerequisite documents.
HDFC Bank Gold Loan EligibilityA person looking to avail of a gold loan from HDFC Bank must own the gold he/she is about to pledge, should be 21 years old at the time of gold loan application.
The end use of the gold loan could be for personal use or business needs like expansion, the opening of a business branch, purchase of office equipment ,etc. The gold should not be used for speculative purposes, like buying land, capital market investment, purchase of gold, or any illegal purpose.
IndusInd Bank Gold Loan EligibilityA person looking to avail of a gold loan from IndusInd Bank must own the gold he/she is about to pledge, should be between 21 years to 70 years old. The end use of the gold loan could be for personal use or business needs.
HDB Financial Services Gold Loan Eligibility- Minimum age of applicant: 21 years
- Maximum age of applicant at loan maturity: 65 years
- Gold jewellery should be owned by the applicant or any of the family members.
Common Document Required for Gold LoanGenerally, the following documents have to be provided by the borrower in avail the gold loan:
• Duly-filled application form
• Passport sized photographs
• Identity proof
• Address Proof
• Signature Proof
• Form 60 or PAN card
• Proof of age
• Post-loan disbursement documents, if any
IIFL processes require minimum paperwork and thus ensure that you do not get hassled with numerous documentation.
E-KYC – We verify your Aadhar card with UIDAI through OTP or Fingerprint scanning and thus complete your KYC online. Once Aadhar authentication is done, you do not need to submit any other KYC document. Additionally, your loan application also gets pre-filled with your Aadhar details making your loan processing faster.
Physical KYC Document
- Identity Proof
- Aadhar Card
- PAN Card
- Valid Driving License,
- Valid Passport
- Voter’s ID Card
- Job Card issued by NREGA
- Address Proof
- Aadhar Card
- Driving License
- Valid Passport
- Voter’s ID Card
- Job Card issued by NREGA
ICICI Bank Gold Loan Documents Required- Two passport size photograph
- ID Proof such as Driving License / PAN Card / Form 60/61 / Passport Copy / Voter ID Card / Aadhaar Card / Ration Card. Anyone document needs to be submitted
- Address Proof such as Driving License / Voter ID Card / Ration Card / Aadhaar Card / Passport Copy / registered lease agreement with not older than 3 months utility bills in the name of landlord (anyone)
- Proof of landholding in case of agriculture loan of more than Rs. 1 lakh
SBI Gold Loan Documents Required- Duly filled application form
- 2 latest passport size photographs
- Identity proof- Voter ID card / PAN card / Passport / Aadhaar card,/Driving License etc
- Address proof: Voter ID card / Passport / Aadhaar card / Driving license etc
- Proof of agricultural land / cultivation
AXIS Bank Gold Loan DocumentsYou can avail of a Gold Loan up to Rs. 25,00,000 for a tenure of your choice between 3 to 36 months. The following documents are required for applying for an Axis Bank Gold Loan:
- Signed application form
- KYC documents
- Post-disbursement documents (if any)
Dhanlaxmi Bank Gold Loan Documents RequiredThe following documents are required while applying for Dhanlaxmi Bank gold loan.
- Application form duly filled by the applicant
- Photographs of the applicant
- Proof of Identity: Voter’s ID card/ Passport/ Driving license/ Aadhaar card provided by UIDAI etc.
- Proof of Address: Voter’s ID card/ Passport/ Driving license/ Aadhaar card provided by UIDAI etc.
HBD Financial Services Documents Required- Proof of Identity & Address Proof – (Passport / Voter’s ID / Driving License/PAN Card*/Aadhar Card or Proof of possession of Aadhaar number (on Voluntary basis))
- Signature Proof (Passport /Driving License/Banker’s verification) Driving License/ Voter’s ID / Utility Bill (anyone (anyone which is not more than two months old of any service provider – electricity, telephone, post-paid mobile phone, piped gas, water bill) / Registered Rental Agreement/Letter of allotment of accommodation from employer/ leave and license agreements with employers allotting official accommodation/ Credit Card Statement)
- Date of Birth Proof (Driving License / PAN Card / Passport / Birth Certificate / 10th / 12th mark sheet bearing date of birth)
- 2 passport size photographs
HDFC Gold Loan Documents Required- Neatly signed and filled HDFC gold loan application form.
- Passport-size photographs.
- Identity and signature proof – Passport, Pan card, Driving License, Voter ID card, Aadhar card, employee identity card in case of government employees.
- Address Proof – Bank statement, Rent Agreement, Voter ID card, Ration card, Passport, Driving License, telephone/electricity/water/credit card bill or Property tax.
- Two postdated cheques for security purpose.
What is a gold loan? Ans: A gold loan is a method of availing finance/loan against your gold ornaments or jewellery such as bangles, necklaces, bracelets, earrings, pendants, watches, gold coins, etc.
Who can avail a gold loan?Ans: Any Indian citizen can avail of a gold loan from banks or non-banking financial institutions (NBFCs) and generally the age criteria ranges from a minimum of 18 years to a maximum of 75 years. This might vary from lender to lender.
What are the modes for the repayment of gold loans?Ans: You can either directly walk into a branch to make a cash payment or pay online using the company’s web portal. Based on the lender’s terms and conditions, you may be able to make the payment with your debit card, credit card, etc. Kindly contact your lender for more information on the same.
What factors affect the loan amount received against the gold ornaments pledged with the lender?Ans: Factors such as the rate of gold on the particular date, purity of the gold used to make the jewellery, etc. affect the loan amount that you will receive against the gold ornaments pledged with the lender.
How long will it take for me to receive the loan amount?Ans: Lenders usually verify and approve gold loan applications on time. Once your application is approved, you will receive the loan amount. The disbursal time may vary from a few minutes to up to 48 hours, in most cases.
Is it safe to pledge my gold ornaments? What measures does the lender take to ascertain the safety of my assets?Ans: Most lenders store pledged assets in a strong room that has electronic surveillance technology. Also, lenders may insure the gold ornaments or assets for their total value. That said, given the nature and value of the assets, it is best to do your research with regard to the measures that are taken by the lender to safeguard your jewellery and assets.
Can I pre-pay the loan amount?Ans: This will vary based on the lender’s terms and conditions. Certain lenders may allow you to pre-pay the loan amount at any time, without having to pay a fee for the same. In some cases, certain financial institutions and banks will require you to pay a certain fee if you want to pre-pay the loan amount.
What will happen if I am unable to repay the loan amount?Ans: If you don’t repay the loan amount within the due date, the lender will levy a penalty on the overdue loan amount. If you do not repay the loan amount even after multiple reminders, the lender may auction your gold ornaments to recover the amount that is due.
Do I have to be an existing customer of a bank/financial institution to avail of a gold loan?Ans: Most lenders will allow you to avail of a gold loan even if you are not an existing customer, provided that you have a good credit score. In certain cases, the lender may require an existing customer to introduce you before you apply for the loan.
How do I check how much I am eligible to borrow?Ans: Most lenders have an eligibility calculator on their respective websites, which you can use to know how much you are eligible to borrow. The amount that you will be allowed to borrow will be based on the value of your ornaments or jewellery.
Am I required to have a guarantor to apply for a gold loan?Ans: Most lenders who offer gold loans do not require prospective applicants to have a guarantor. However, for high-value loans, you may be required to have a guarantor.
I do not have a decent credit score for a loan, can I still get a gold loan?Ans: Yes, you do not need to have a good credit score to avail of a gold loan as the loan is a secured one. So, for gold loan eligibility you just need to have gold and those with low credit score or default repayments are eligible to get a gold loan. However, gold loan is taken into account in your CIBIL report and hence you should pay regular EMIs to improve your CIBIL score.
What are the benefits of Gold Loan?Ans: Gold Loan has the following benefits:
- Allows you to utilize your jewel holdings in times of urgent expense requirements and emergencies
- Low-interest cost compared to personal loans
- Easy loans with no income proofs and no CIBIL checks required.
- Also allows first-time borrowers and borrowers with bad credit to get loans.
- Helps improve CIBIL score, as timely repayment is recorded in your CIBIL reports
- Instant loans with a turnaround time of few hours to 1-2 days
- Loan amounts of up to Rs 50 lakh also available
- No end-use restrictions. The loan can be taken for any personal or business expenses
- No proof in the form of invoice or purchase bill of the jewelry required
Does my credit score have any effect on my gold loan?Ans: To avail of the gold loan, credit score is not mandatory. So, whether you have a credit history or not, is not considered during the loan application process.
Is taking gold loan safe?Ans: All the top banks and NBFCs provide the gold loan. The gold you submit as collateral is kept safe under high security as per the guidelines of RBI. After you have repaid the loan along with interest, your gold is returned to you in the same form. Thus, availing the gold loan is safe.
Which is better: Gold Loan Vs Personal Loan?Ans: A gold loan is a secured loan, while a personal loan is an unsecured loan. The average rate of interest that you can get in the gold loan is much lower than what you will get in a personal loans. However, the maximum tenure of the loan is up to 3 years for the gold loan while it is 5 years for the personal loan. So, in case you have gold, and you think you can repay the loan within 3 years, a gold loan is a better option in this scenario.
What type of gold jewellery or coins is accepted as collateral for a gold loan?Ans: Currently, all forms of gold jewellery including rings, necklaces, bangles ,etc. are accepted as security. Some banks accept specific gold coins of up to a certain weight, but gold bars are not yet accepted as collateral. In case the gold ornaments are encrusted with valuable gems, the valuation costs would not include the value of gems and your loan amount will be decided based on the weight of gold.
What happens to the gold ornaments I use as collateral?Ans: Your gold collateral needs to be deposited with the bank or NBFC, where it is stored in a secure vault with CCTV security as well as round the clock security presence. You will get the gold kept as collateral back once you have paid back the loan principal plus interest in full.
Is there an option for prepayment in case of a gold loan?Ans: Usually, banks allow borrowers to prepay their gold loan before the tenure ends and most of them do not charge any prepayment penalty. Others might charge a prepayment penalty which varies from lender to lender.
I do not have a decent credit score for a loan, can I still get a gold loan?Ans: Yes, you do not need to have a good credit score to avail of a gold loan as the loan is a secured one. So, for gold loan eligibility you just need to have gold and those with low credit score or default repayments are eligible to get a gold loan. However, gold loan is taken into account in your CIBIL report and hence you should pay regular EMIs to improve your CIBIL score.
