What is a gold loan? (2024)

What is a gold loan?

Gold loan (also called loan against gold) is a secured loan taken by the borrower from a lender by pledging their gold articles (within a range of 18-24 carats) as collateral. The loan amount provided is a certain percentage of the gold, typically upto 80%, based on the current market value and quality of gold.

What is gold loan and how it works?

For a Gold Loan, the bank takes your gold as collateral for the period of the loan. Banks charge an interest rate, and once you repay the entire loan, the bank returns your jewellery. Another essential thing you need to know about how Gold Loan works is the type of gold accepted.

Is a gold loan good or bad?

A gold loan can be a suitable option for those looking for a loan with collateral. The loan amount is based on the value of the gold, allowing borrowers to access up to 75% of its worth. The interest rates for gold loans are generally low, making it a cost-effective option.

What is an example of a gold loan?

Loan to value ratio or LTV ration means the amount a customer will get against the value of gold. For example, if the value of jewelry is INR 10,000 and the LTV is 65%, the maximum loan amount the customer can get would be INR 6,500.

What is the difference between gold loan and personal loan?

Loans against gold ornaments are short-term loans with a tenure of 6 months to 12 months. On the other hand, you can take a personal loan for a duration of 12 months to 60 months. If you are only looking to manage a temporary financial emergency, a gold loan can be a great option.

How long does a gold loan last?

Gold Loans come with relatively shorter repayment tenures as compared to most other loans. Typically Gold Loan maximum tenure for repayment is 24 months in case of long-term loans repaid in EMIs, and six months in case of short-term loans repaid in a lump sum.

How is gold loan paid?

The different ways to repay the gold loan include paying the principal amount and interest amount equally in monthly instalments, paying the interest amount as EMIs and paying the principal amount at the end of tenure, making partial repayments based on fund availability throughout the tenure, and bullet repayment.

Does gold loan affect credit score?

All in all, a Gold Loan can have a substantial effect on your credit scores. Firstly you must apply for loans in a timely fashion and avoid borrowing too heavily. Secondly, you must ensure that you repay loans on time to improve your credit score.

What is the rule for gold loan?

You can qualify for a gold loan easily, as long as you are within the eligible range, and you have 18-22 karat gold jewellery. You do not need to have a high CIBIL Score to apply for this loan, as you are providing your gold jewellery as collateral. You can only submit gold jewellery as security against this loan.

Which bank is best for gold loan?

What is gold loan interest rate?

How much is a gold loan per gram?

Gold loan per gram is the amount given as a loan for every gram of pledged gold. For example, IIFL offers Rs 3,504 per gram. If you have 100 gms of gold, the offered loan amount will be Rs 3,50,400.

Is gold loan a mortgage loan?

A gold loan is a loan that is taken by offering gold as collateral to the lender. The value of the gold pledged as collateral is usually always higher than the loan amount. This means that most lenders can offer you a gold mortgage loan equal to and above 75% % of the pledged yellow metal's market value.

What are the advantages and disadvantages of gold loan?

Does gold loan come under personal loan?

Gold loans and personal loans have their own advantages and disadvantages. You should weigh the two options against each other before making your choice. But remember that you will need gold assets to get a loan against it, while you don't need any collateral for personal loans.

Are gold funds risky?

No, gold is generally considered a lower-risk investment, especially for the medium to long term. It has a history of maintaining its value and acting as a hedge against inflation and market volatility. The main risks come from short-term price fluctuations. But gold has demonstrated long-term stability.

Is gold loan cheaper?

Gold loans are secured loans and, therefore, attract a lower interest rate. However, personal loans, being unsecured loans, have a higher interest rate than gold loans. Further, gold loans attract lower processing fees and other charges while these charges are relatively higher in personal loans.

Is it a risky investment in gold?

Is Gold a Good Investment? As an investment that is considered relatively safe, gold competes against government bonds. Gold is often viewed as a safe-haven investment that can perform well when stocks are on the back foot.

How much gold loan can I get?

The gold loan per gram rate changes daily as per market value of one gram gold. This is referred to as LTV or loan-to-value ratio. For example, if the LTV is 70% and the value of the pledged gold is worth Rs. 1 lakh, a borrower will get a loan of Rs. 70,000. Bajaj Finance offers LTV ratio of 75% on gold loans.

Which bank has lowest gold loan interest?

Can I pay my gold loan in cash?

Pay Interest As EMI & Principal At The Time Of Maturity

So, when the loan matures, you can just pay the principal amount as a lump sum and get back your gold.

Can I use my credit card to pay gold loan?

Direct payment through the lender's website: Many lenders allow direct repayment of gold loans through their website using your credit card. Simply log in to your account, select the payment option, and enter your credit card details to clear your dues instantly.

How do I clear my gold loan?

Will banks loan on gold?

Gold bullion is an increasingly popular choice for collateral when taking out a loan. One of the main pros of using gold bullion as collateral is its liquidity. It can be easily converted into cash or exchanged for goods and services at any given time.

What is a gold credit score?

The American Express® Gold card needs you to have at least a good or excellent FICO® Score (670-850, but anything above 700 is usually recommended by most experts) for approval.