Most households in India have gold articles lying inactive in their lockers. However, fortunately, they can be effectively utilized when you need it the most. When in an earnest requirement for cash, you can utilize your gold articles to finance your immediate financial requirements. There are different banks and NBFCs across India that offer gold loan to their customers at attractive gold loan interest rates. However, prior to applying for a gold loan, you should know about its procedure, merits, and demerits, which is further discussed in the post.
What is the procedure to apply for a gold loan?
The procedure of gold loan differs starting with one lender then onto the next. The possibility of a gold loan is basic; you pledge your gold articles and get the loan sum in lieu. To do as such, you visit a lending institution with the gold you need to pledge and the necessary documents. The lender performs gold immaculateness checks and decides its weight based on which it evaluates its fairly estimated worth. Gold loans can be sanctioned up to 80 per cent of the calculated value of the pledged gold.
Nowadays, the gold loan can likewise be applied online through the bank's or NBFC's versatile application or official site. However, applying for a gold loan online doesn't imply that you won't need to visit your lender. To benefit the facility of the online gold loan, you should visit your lender in any event once to store your gold articles. So in future at whatever point you are out of luck or cash critically, you can apply for a gold loan and get the accessible credit dispensed in your bank account whenever anyplace in only a couple minutes.
What are the benefits of the gold loan?
Quicker processing – Gold loans are secured loans and hence includes merciful qualification criteria and negligible documentation. It doesn't need credit score for loan endorsements. Furthermore, consequently, lenders by and large dispense the loan in only a couple hours.
Lower interest rate – As compared to unsecured loan such as close to a home loan, gold loans, which is a secured loan, charge a lower rate of interest. Likewise, in the event that you attach another resource as collateral, the gold loan interest rate can be lowered further.
No processing fees – Many banks and NBFCs demand zero processing fees on gold loans. Regardless of whether a lender charges processing fees, it is normally 1%.
No foreclosure charges – Some lenders don't collect any pre-installment charges while a portion of the banks does charge a pre-installment punishment of 1%.
Income proof isn't required – Lenders, for the most part, don't ask for an income proof in gold loans as the loan is secured against gold. Subsequently, anybody can apply for a gold loan if acquiring.
The credit score isn't needed – Unlike most loans, gold loan endorsement doesn't rely upon your credit score. In case of different loans, the loan sum is given based on the reimbursement capacity and credit history of the borrower however in the gold loan, the loan sum is decided the available value of gold.
Axis Bank offers one of most reduced gold loan rate of 13.00%, both for its current bank customers just as new borrowers. Axis Bank gold loan interest rate changes by the measure of loan, virtue of gold and loan to value ratio.
What are the disadvantages of the gold loan?
Loan-to-Value Ratio: In a gold loan, you get a certain percentage of the market value of the pledged gold as the loan sum. The loan sum is decided based on the LTV (Loan to Value) ratio. This ratio changes from lender to lender and goes up to a maximum of 80% of the value of the pledged gold.
Because of loan default, you can lose your gold – In case of gold loan default, lenders have the legal option to freeze your resources and auction it to get the outstanding gold loan sum.
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