You can get a gold loan by pledging gold ornaments as collateral to a lender (bank or NBFC). Based on the market value of your gold, the lender will give you a loan amount. At the end of your chosen tenure, your gold will be returned after repaying the loan amount and interest.
In India, gold deposits are often used as collateral for loaning money. Gold is given as security for the money that lenders disburse. You can use the funds for your business expenses, medical expenses, or any other financial need without asking anyone for help and fulfilling your needs all by yourself.
You may have several doubts about a gold loan, which is a relatively easy way to obtain urgent funds. The following is a list of common questions and expert answers to assist you.
Your gold ornaments can be pledged as collateral, and their purity determines how much you can borrow. A bank does not accept gold in the form of bars, coins, or bullions as collateral for gold loans. Gold lenders assess the purity of your gold and tell you how much you can borrow based on its purity. According to RBI guidelines, this amount can be up to 75% of the gold’s value. Banks charge processing fees according to their policies.
Does the lender protect your gold?
Your gold jewelry may be misplaced or stolen if you are dealing with an unlicensed bank or NBFC. You should apply for a gold loan from a reputable lender. As your gold is stored in a vault, you don’t have to worry about its safety. You can have greater peace of mind knowing your valuable possession is safe.
A passport photograph and two proofs of identity (passport, driver’s license, Aadhaar card) and address (electricity bill, phone bill) must also be submitted. Form 60 can be offered if you don’t have a PAN card.
Individuals 18 years of age and older can apply for a gold loan by pledging their gold. The loan amount can be disbursed over the counter within 45 minutes if all your documents are ready.
Ways of Repaying Your Gold Loan
Pay interest as EMI and principal later
As part of this option, you can repay the interest amount as per the EMI schedule of the gold loan, but the principal must be refunded in full when the loan matures. An arrangement of this nature works well for most borrowers since they only have to pay interest throughout the loan tenure and don’t have to worry about principal repayment.
Pay in Partials
You can make partial principal and interest payments as and when you wish. It is not essential to adhere to the EMI schedule in the case of gold loans. Until now, gold loans have been customer-centered. Irrespective of the pre-set EMI schedule, interest, and principal components can be partially or even fully paid off. In the first instance, the principal will be repaid before interest. There will be a decrease in the total amount of interest you pay, which is usually calculated daily on the loan amount outstanding. In this way, you will be able to save significantly on your interest payments.
Repayment of Bullets
The Bullet Repayment method requires you to repay the entire principal amount and interest at the end of the loan term. That’s right! No interest or principal payments on the loan. Pay off your entire loan upon completion. The term “bullet repayment” refers to paying all of the due amounts at the end of the time, eliminating the need to service EMIs. Furthermore, interest (along with principal repayment) is calculated each month in this repayment mechanism. However, the interest payment is due only at the end of the term.
EMI: regular monthly installments
Designed for the salaried class, the regular EMI Gold loan is intended for people who receive monthly payments in their bank accounts. The principal and interest payments are included in the EMI amount. Since this loan goes to salaried applicants, it is also a quick process.
Conclusion:
In most cases, you can prepay gold loans whenever you want, as most of them do not require a minimum lock-in period or a prepayment penalty. The repayment terms of gold loans are usually short, with most having a maximum of 5 years and an average of 1 year or less.
The loan account will be closed once you deposit the outstanding principal amount with the updated interest amount at the lender to complete your gold loan account. Upon confirmation of the closure of the loan account, the concerned authority (most commonly the branch manager) will return the collateral gold to you and obtain your acknowledgment. Hence if you are interested in gold loans, then Rupeek is the best option to get an easy online gold loan with a quick process.
