Gold loans or loans against gold is a secured loan type which helps borrowers to take loans at a low-interest rate. In this loan, the borrower pledges his/her gold ornaments with the lending institutions (Banks/NBFCs) as collateral. Since it has collateral involved, the lending institutions thus take the ease off the rate of interests and the documents required.
Banks are always more comfortable lending against security as compared to a loan application backed by no security. Higher the quality standards of security, the quicker the loan disbursement. One's gold ornaments are always a good and solid security for a loan provider, it clearly knows. The fact that in case of non-payment of the loaned amount, it has the option of auctioning the gold and releasing its dues.
ICICI gold loan charge an interest rate in the range of 10-17%, depending on the net weight and purity of the gold. Moreover, banks do not ask for a guarantor while giving out a gold loan. Few loan providers also entertain pre-payment of the gold loan without charging any pre-payment penalty, though in some cases it is only 1 percent.
Documents required:
Basically one just needs ID proof, address proof, and passport size photographs. The borrower can thus bring any of the following:
Driving license
Passport
Voter's ID
Ration card
Aadhar card
PAN card
All loan providers before giving a loan to any Loanee require that he has a strong repayment capacity, thus a stable salary, whereas in gold loan one does not require any income proof. The housewives and senior citizens can also avail this loan. Unlike other loans, your credit history or CIBIL score does not matter if you want to avail of this loan, but it does affect your CIBIL score when it comes to repayment. Timely repayments can increase the CIBIL score whereas not repaying the amount on time can adversely affect that.
Conclusion:
The gold loan can be beneficial and a hassle-free process to avail in case of an urgent financial crunch. In this pandemic, due to the lockdown, many lending institutions have started providing doorstep facilities and lower gold loan interest rate for loans. It is thus just a click away to get your loan approved and have money in hand.
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