Commonly Asked Questions About Gold Loan
Gold loans are safe, but you need to know every aspect before getting one. Read to know the frequently asked questions regarding gold loan at IIFL Finance.
Gold is a haven in the investing world due to its appreciating nature. With its monetary value, Indians have a sentimental value attached to it, too. More than a piece of jewellery, Indians store it for financial emergencies or if they need to take a gold loan to fund their personal or professional dreams.This article will give you the answers to the most commonly asked questions about a gold loan.
1. What Is A Gold Loan?A gold loan is an avenue of borrowing money from a lender using your gold items as collateral. The money you can borrow is usually 90% of the value of the gold you pledge. You must pay the principal amount with interest in installments during the loan tenure. If you repay all the borrowed money with interest, you get your pledged gold items back.
2. What Are The Eligibility Criteria For A Gold Loan?A gold loan is easy to avail. The minimum age requirement is 18 years, while the maximum age depends from lender to lender. However, your golden items must match the purity of 18k to 24k gold to qualify for the loan.
3. What Are The Documents Required For A Gold Loan?While the detailed documentation requirements are lender-specific, the essential paperwork you should keep handy includes the following.
a. Passport-sized photographs
b. Identity proof - Aadhaar card, PAN card, etc.
c. Address proof - Electricity bill, telephone bill, etc.
4. What Is The Interest Calculated On A Gold Loan?The gold loan interest rate depends on the lender and various other factors. However, interest rates may vary between 7% to 29% per annum.
5. What Are The Factors Affecting A Gold Loan Interest Rate?Various factors determine the applicable interest rate on a gold loan, including but not limited to:
a. Loan amount
b. Monthly income
c. Credit score
d. Gold value
6. How Is The EMI Calculated On A Gold Loan?You can find various EMI calculators to calculate the estimated amount. However, the significant factors determining the EMI amount are based on the following.
a. The interest rate
b. Loan amount
c. Loan tenure
7. What Are The Additional Charges Involved In A Gold Loan?Apart from the interest rate, the additional fees may include
a. Loan processing fee
b. Bank charges
c. Renewal charges
8. What Is The Typical Gold Loan Tenure?Typically, a gold loan tenure is 3-12 months. However, the term for repaying does not exceed 20 months.
9. What Are The Repayment Options Available For A Gold Loan?Lenders and borrowers unanimously decide the repayment scheme. It can be of the following types.
a. Daily EMI option
b. Partial payment
c. Bullet repayment
d. Interest now, principal later
10. What Is The Maximum Gold Loan You Can Avail Yourself Of?The amount you can get ranges from INR 15,000 to INR 1 crore. These figures vary by financial institution depending on eligibility and per gram rate of gold. The maximum loan sanction is 90% of the pledged gold.
11. What Kind Of Gold Can I Pledge?The purity of the gold should range between 18k to 24k. You can pledge any gold ornament as collateral for a gold loan. The value of gold determines the loan amount you get. If gold jewellery has gems or gemstones, the price will not increase, as only gold value matters.
12. Is My Gold Safe As Collateral?Most financial institutions implement high-level security that ensures the safety of your gold. However, during a robbery, lenders are responsible for repaying an amount equal to the value of gold.
13. What If I Do Not Pay Back The Loan Amount?If you default on repayment, the financial institution will sell your collateral (gold) to recover the amount.
14. Is A Nominee Required For A Gold Loan?A nominee requirement varies by bank or financial institution. Some lenders do not require a nominee, while others do. The nominee will receive the account proceeds upon the borrower’s death.
15. Is A Gold Loan Transferable?Yes, you can transfer your loan from one bank to another. But before you transfer, you have to pay at least some EMI amount with the existing lender before switching.
16. Can Only Existing Customers Take A Gold Loan From The Bank?No, you don’t need to be an existing bank customer to get a gold loan. However, it is beneficial if you are one as it expedites the loan process.
17. How Is My CIBIL Score Affected While Taking A Gold Loan?Your credit history generates a CIBIL score. Therefore, defaulting on your gold loan EMIs or full repayment may negatively impact your CIBIL score.
18. What Is The Medium Of Gold Loan Repayment?Different repayment options are available, including cash, cheque, net banking, UPI, debit cards, and demand drafts. You can select the option most suitable for you.
19. Why Should I Get A Gold Loan?There are several benefits of using a loan, some of which are listed below.
a. Fast and easy to process
b. Easy documentation
c. Interest rates are lower than other loans
Apply For A Gold Loan With IIFL FinanceIIFL Finance is a leading gold loan provider. We provide quick gold loans with the least hassle. You can check the most competitive gold loan interest rates at your nearest IIFL Finance branch or apply for gold loans online.
The entire process, from application to disbursement, is 100% online. The disbursals take only a few hours from end to end. You can access funds quickly and repay them as per the set cycle. Apply for an IIFL Finance gold loan today!