What is a Gold Loan?
Gold Loan is a type of personal loan which is given against security of gold. Many private banks, public sector banks and other finance companies provide gold loans at attractive rates.
Many people opt for this loan instead of unsecured personal loans to meet the requirements of their children’s studies, marriages and other short term needs.
With the increase of gold prices over recent years, demand for gold loans has increased significantly in monetary terms. For example, Muthoot Finance, one of the leading gold loan providers, has seen a 25% increase in the Gold Loan.
Benefits of Gold Loan:
- Lower interest rates compared to personal loans – As gold loans are secured against the pledged gold jewellery and ornaments, rate of interest available on gold loan tends to be lower than that available for unsecured personal loans.
- Muthoot Finance Gold Loan Interest Rates, Schemes, Best Offers
- Mannapuram Finance Gold Loan Interest Rates, Schemes, Best Offers
- Federal Bank Gold Loan Interest Rates, Schemes, Best Offers
- SBI Gold Loan Interest Rates, Schemes, Best Offers
- Minimum paperwork – Bare minimum paper work is required for hold loans. You just need an address proof and an ID proof. Simple process – Bank is lending against the security of gold, which is easy to sell and trade. Hence, it doesn’t need to do a detailed credit check on the customer. All you need to do is need to do is pledge your gold and take up-to 70% of the total market value of the gold as loan.
- No income proof – One of the main benefits of gold loan is that you don’t need any salary proof for taking a gold loan. Even an unemployed or non-working person can get a gold loan.
- No CIBIL check – Banks and gold loan companies don’t insist on a clean CIBIL report or a high CIBIL score for sanctioning a gold loan. However, gold loan availed by you appears in your CIBIL report. So, any default on gold loan may negatively impact your CIBIL score. On the other hand, a good repayment track record on gold loan may help improve your CIBIL score.
- In rural areas, agriculture loan against gold is also available for farmers at low interest rates.
- In gold loan, borrowers also have an option to pay entire interest at the end of the loan repayment period instead of regular EMI’s.
Some charges applicable on gold loan:
- Loan processing charges: Some banks may waive the charges while others take a processing fee.
- Late payment penalty: Any delay in repayment of interest or principal will entail a late payment penalty. Actual penalty may vary from bank to bank.
It is always advisable to check all applicable charges with the gold loan provider before taking the loan. These extra charges could dramatically change the amount which you finally receive.
Important documents required for gold loan:
- Identity proof such as driving license, passport etc.
- Address proof such as ration card, electricity bill etc.
- Signature proof – either PAN card or bank attestation.
- 3 passport size photographs.
Below we have listed some of the leading banks and some other financial companies which offer gold loan.
- SBI, HDFC and ICICI Bank
- Muthoot finance
- Mannapuram Gold loan