A gold loan is a secured loan that can be procured by pledging gold ornaments such as jewellery as collateral with a bank or Non-Banking Financial Company (NBFC). The lender determines the value of the gold and issues the determined amount as a loan for a chosen period.
The gold remains safe with the lender in a secured locker that is on 24×7 CCTV surveillance and will be returned upon complete repayment of the loan.
Everything to know about gold loan
It is a common practice to borrow money against gold deposits. The loan amount disbursed by the bank or NBFC can be used to meet financial requirements such as medical treatment, business expenses, or paying for wedding expenses.
Here are the answers to common questions regarding a gold loan
How to apply for a gold loan?
The process of applying for muthoot gold loan is fast and simple. One way you can get a loan against gold deposits is by taking the article to the lender along with your KYC documents such as Aadhaar Card.
An expert from the bank determines the quality of gold and sets a market value based on a gold loan calculator. A certain percentage of the gold’s market value can be issued as a loan. As per the Reserve Bank of India, the loan amount can be up to 90% of the value of the gold.
How are the gold loan eligibility and interest rate calculated?
Lenders used an easy and simple software called Gold Loan Calculator or EMI calculator to determine gold loan eligibility and the eligible loan amount. It also helps to know the interest rate payable and the number of EMIs to be paid.
The loan amount against the gold deposit is calculated based on the purity of the gold. The higher the purity level, the higher the loan amount will be.
What are the documents needed for a gold loan?
The documents required for the procurement of gold loan is minimum. The below documents are required to submit.
- A passport size photo
- ID Proof: (Passport / Driving License / Voter ID Card / PAN Card / Ration Card)
- Address Proof: (Passport / Driving License / Voter ID Card / PAN Card / registered lease agreement)
What are the eligibility criteria to apply for a gold loan?
Anyone who is 18 years old or above can pledge his/her gold ornaments to apply for a gold loan.
What are the gold loan repayment options?
The repayment options against gold loans are flexible and are created based on your convenience. You can choose to pay the interest amount upfront and the principal amount at the end of the tenure or pay on Equated Monthly Instalments (EMI).
You can choose to pay both the principal amount with the interest amount at the end of the loan tenure.
What happens if you default on repayment?
Before you take a gold loan, always measure your repayment capacity. The bank has exclusive rights to auction your gold article and recover the remaining loan amount.
How much time does it take to sanction the loan?
If your documents are with you, it shouldn’t take more than a maximum of 45 minutes as the value of the gold is determined on the spot by the bank’s experts.