Gold Loan Balance Transfer - Complete Guide
Check Gold Loan Balance Transfer details at IIFL Finance. Read to know the complete details on gold loan balance transfer process to help you make an informed decision!
India is known for its tradition of passing down gold ornaments and jewellery from one generation to the next. As a result, using gold as collateral to obtain funds is the most feasible borrowing mode for most citizens in the country.
However, people often apply for gold loans without doing their due diligence first. As a result, they end up with a gold loan company that does not offer them the best deal. If you have been in a similar situation, a gold loan balance transfer can save your EMI costs and get you a higher payout for your gold.
What Is A Gold Loan Transfer?
Gold loan is a convenient method to get easy and fast funds by keeping gold jewellery mortgaged. As gold is one of the preferred mediums for savings in India, gold loans have grown in the country in the past few decades and now may lenders offer gold loans. This has also given a choice to borrowers to transfer their gold loans to different lenders in case they want to.
A borrower may opt for gold loan transfer for various reason, including chance of lower interest rate or longer borrowing period. Some lender may also offer higher loan if prices of gold has risen. However, not all lenders offer the option of gold loan transfer and one has to weigh all the pros and cons before submitting to the process.
What Are The Other Advantages Of A Gold Loan Transfer?The advantages include:
1. Reduction In Interest:
Many lenders charge higher Gold Loan EMI than their competitors. Borrowers can choose a lender with a lowest gold loan interest rate by transferring their loans, making the process of paying a loan much easier.
2. An Increased Rate Per Gram:
Financial institutions offer loans anywhere upto 75% of the gold loan value. If you’re getting a lower value for your gold, moving the loan to a provider offering a higher loan-to-value (LTV) ratio is a great option.
3. Better Terms:
Gold loan transfer offers a possibility to get better loan features, including flexible repayment terms and no processing fees.
4. Improved Security And Insurance Facilities:
Some borrowers may be dissatisfied with the security for their gold provided by their current lender. Therefore, a gold loan transfer to a lender that offers better protection, such as insurance policies, might be the better option for them.
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What Is The Gold Loan Transfer Process?
Follow these steps to successfully transfer your gold loan balance:
Provide the new lender with your existing pledge card to begin the gold loan transfer process.
After the details of the entire transfer process are sorted out, you will receive an analysis of the savings report that you must evaluate and then approve.
Following confirmation, complete the KYC process to finalize the gold loan personal loan transfer.
You'll receive a detailed description of how much Gold Loan EMI you have to pay to the original lender to start the transfer of gold to the new lender.
Upon paying this interest, your gold loan will successfully get transferred to the new lender.
What Are The Gold Loan Transfer Documents Required?
The following gold loan documents are often requested by lenders during gold loan transfers:
• Filled gold loan application form.
• Identification Proof. It could be an Aadhar card, PAN card, passport, driving license, or voter ID.
• Proof of address, which may be in the form of utility bill, gas bill, water bill (latest), passport, and more.
• A signature proof.
• Passport-size photographs.
Gold Loan Balance Transfer Charges
A gold loan balance transfer involves some charges, which vary based on the existing lender and the new lender. These charges include:
1. Pre-Closure Charges:
Often called foreclosure charges, pre-closure charges are the fees you pay to your existing lenders to cover the interest loss when you close your loan too early. Every bank has different foreclosure criteria, and they range from nil to up to 1%.
2. Processing Fees:
Processing fees charged by banks and NBFCs range from 1% to 5% of the loan amount.
3. Inspection Charges:
A fee is charged by the financial institution when they evaluate pledged collateral.
4. Administration Charges:
When you apply for a loan, a lender charges you a non-refundable fee, which applies to the basis of the loan amount.
Save More With Gold Transfer With IIFL Finance
IIFL Finance offers the best benefits when you want to maximise the benefits of gold loan. The interest rate is as low as 0.83% p.m. and there are no processing fees involved. Transferring your existing loan balance to IIFL can easily increase the value of your existing loan by 30%. Additionally, if you're looking for a way to get an extension of your loan in under 30 minutes, the IIFL Gold loan is your best choice.
Frequently Asked Questions
Q1. Does transferring a gold loan cost anything?
Ans. Yes. Transferring your gold loan will involve some fees like foreclosure charges to your previous bank, and processing and administration charges to your new lender. These fees can vary from lender to lender.
Q2. What are the effects of gold loans on credit scores?
Ans. Gold loan EMI payments are reported to CIBIL regularly to update your credit score. As with any loan, the gold loan has an interest rate and term. Make sure that you repay the loan on time.
Q3. Is a balance transfer of gold loan a good idea?
Ans. A borrower should check the cost of gold loan transfer, such as penalty etc, and weigh it against the savings, including those from lower interest rate. If the borrower ends up saving money or the new lender offer better gold loan repayment term, then only fold loan transfer makes sense.
Q4. What happens if you don’t pay back your gold loan?
Ans. The lender will have the option to sell the pledged jewellery in case the gold loan is not repaid in full. The lender, whoever, has to notify the borrower two weeks before any such auction.
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