What is The Maximum Tenure for Gold Loan
A gold loan, also known as a loan against gold, is a type of secured loan in which the borrower pledges an item of gold jewelry or bullion between 18 and 24 karats as collateral with the lender. Depending on the gold’s grade and the current market price, the loan amount may be anywhere from a few percent to as much as 80 percent of the gold’s value. Read further to learn about gold loan tenure.
Why should one consider a gold loan?
A loan against gold, like a personal loan, can help you fulfill your current financial needs, whether they’re related to an overseas school, a wedding, unexpected medical bills, or something else entirely.
- Since gold loans are collateralized, they can be disbursed quickly with little paperwork.
- Since the loan’s ultimate purpose is not tracked, you are free to put the money toward whatever you need.
- You can get a secured loan without having to put up any other collateral beyond the gold jewelry.
- Since gold is used as security for gold loans, the interest rates are significantly lower than those of unsecured personal loans.
- Gold is mostly held as a store of value rather than a means to generate income. So, if you need money for whatever reason, a gold loan might provide you with the appropriate solution. A bank or other financial institution’s locker is a safer place for it than your own house.
Why should one opt for Gold Loan?
- Those in need of funds in the short-term
When a company needs money quickly, they can get a gold loan, which serves as working capital. A gold loan would be preferable to a personal loan with high interest rates in these circumstances.
- Those who have a weak financial standing
A gold loan can be given to a borrower with a low credit score since the jewelry is used as collateral against the loan.
- Those who are taking out a private loan despite owning gold.
Borrowers who need money for a short period of time and have gold sitting in storage may choose to explore a gold loan instead of a traditional personal loan.
- Those that choose an unregulated gold loan provider
When users are afraid of being turned down for a loan by conventional financial institutions due to their credit history, they may consider applying for a gold loan from an unregulated source. Users in this category often wind up paying exorbitant interest rates of 25% to 50% annually.
Getting a gold loan through a bank or other institutional lender is preferable because your credit score won’t play a role in the approval of the loan. Banks are obligated to charge interest in accordance with RBI regulations, which are market-compliant and not excessive, therefore this will help save money on interest.
What is the average APR and application fee?
Gold loans have interest rates between 9.24% and 17%, depending on the lender. Some loan providers also tack on a minimal processing fee, often between 1% and 3% of the total loan amount. Before committing to a loan, it’s smart to investigate and evaluate the lender’s interest rate, processing fee, late payment fees, and prepayment penalties.
What kinds of paperwork are needed to get a loan application started?
Loan requirements for gold differ from one financial institution to the next. A passport photo, evidence of identity (such as a PAN card or voter ID), and proof of residence (such as a driver’s license or utility bill) are all standard requirements.
What are the tenures for which I can avail the loan?
Loan terms for gold are typically between one month and five years, though this might vary from lender to lender. As was previously discussed, Gold Loans are typically more affordable than their unsecured counterparts. Gold Loan interest rates are typically between 10% and 16%, but can go higher depending on the lender. The standard loan term for this type of financing is between 6 and 12 months. If you pay back your loan in full and on time, you’ll get your gold ornaments back in the same condition they were given to you in.
In times of financial emergency, gold loans can be a helpful resource. Not only should you be familiar with such goods so that you can meet future needs, but you should also be aware of the upcoming new versions that are both more secure and lessen the overall gold loan application of the loan. Gold loan tenure will also help you to get to know more about gold loan.