Gold Loan Explained Through Some FAQs

One of the most in-demand metals globally and primarily in India is gold. Gold demand in India has remained constant despite the volatile market trends, recession, and other economic factors. Gold is considered for long-term investments, be it in the form of jewellery, bars, or exchange-traded funds. It is one of the instruments that people rely on during the testing times as gold bails people from financial worries.

Precisely why users take out a gold loan for emergency funding. But what is all the fascination concerning the gold? We will understand the loan concept via FAQs.

  • What are gold loans all about?

These are loan offered by banks and NBFCs where you can take out cash in exchange of gold. The gold remains under the custody of the lender as security until you repay the loan.

  • What is the loan repayment tenure?

The loan against gold is a short-term credit and offers immediate funds during urgency. You can commit the repayment tenure to the lender. Generally, you can repay the loan in a day or up to a specific number of instalments, based on the agreement with your lender.

  • What is the typical loan disbursal time?

Such loans get disbursed immediately. However, the lender may ask for some proofs of purchase and other essential documents. Lenders may also verify the gold value before considering the application and amount that can get sanctioned.

  • What is the interest charged against the loan?

The interest rate on the gold loan is on the lenders’ discretion. There is no set or base rate when it comes to such loans. Since they are secured loans, lenders typically charge lower interest rates.

  • What is the maximum amount for which you can apply for the loan?

The loan value varies from lender to lender. It also depends on eligibility. The borrower needs to fit the criteria of the lender institute. One can get a loan against gold for as low as INR 1,500 to INR 50 lakh.

  • What are the documents required for availing of the loan?

You need to offer Government approved ID and address proofs such as passport, driving license, PAN card, Aadhaar, ration card, utility bill, voter’s ID, and original gold bills. Only then the credit gets sanctioned.

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