Gold is a precious metal used for investment as well as making jewellery in the world. Its demand will be always increasing in the future. Everyone likes to invest in Gold in the form of jewellery and gold coins.
But
do you know, gold can be pledged in case of emergency need of money or children
education or any other purpose.
You
need not to sell the gold in an emergency situation instead you can take a loan
against gold from any bank or NBFC within 2 to 3 hours and minimal
documentation.
In
the following paragraph, we have explained the complete gold loan process
and its benefits and disadvantages.
What is the procedure of gold loan?
The process of gold loan is very simple as compared to other loans. A gold loan is a secured loan and you have to pledge your gold articles in the bank. You need to follow the following procedure:
1) Visit your nearest bank or where you have a bank account and consult with the gold loan manager or representative for complete details about gold loan interest rate, tenure of gold loan and how much gold loan per gram will be approved by the bank.
2) You
need to bring gold articles along with you for pledging in the bank. In case of
heavy loan you can bring gold articles after complete consult the gold loan
process with the bank.
Before sanctioning a gold loan, the bank's gold loan managers check the purity and valuation of gold articles or ornaments. Normally, banks sanction 80% loan on the gold articles value. For example: if your gold articles have 100000 value then your gold loan will be 80000.
3) Thereafter,
you need to complete the documentations for approving the gold loan. The documents
required for gold loan are:
- Application form (provided by the bank)
- Identity Proof (Pan Card, Driving licence, Aadhar card etc.)
- Address Proof
- Passport size photograph
4) After completing the documentation and verifying the gold articles, the Bank sanctioned the gold loan within 2 hours. If you have a bank account in the same bank then the amount of gold loan will be directly transferred to your bank account.
If you do not have a bank account in the same bank then the gold loan amount can be reimbursed in other modes like demand draft, check or NEFT etc. as per the bank rules.
5) You need to pay stamp duty, processing charges and gold valuation charges in your bank. Some banks do not charge processing and valuation charges. These charges will be deducted from your gold loan amount.
6) You can attach gold loan insurance with this loan by consulting your gold loan manager. You need to pay a very minimum premium for this facility. It secured your gold loan in case of any mishappening.
7) You will be given two options for repayment of gold loan i.e. lump sum or EMI. In lump sum, you need to pay only interest in monthly installment (if loan is more than 6 months) during the period of loan.
On maturity, you have to pay the
principal value of the loan in the bank. In EMI, you can pay the principal
value and interest on monthly installment.
We
hope the above procedure of gold loan will helpful to you, now we
are explaining the benefits and disadvantages of gold loans.
Keep
up reading…..
What are the benefits of a gold loan?
- The process of gold loan is very easy and fast, your loan will be sanctioned within 2 to 3 hours.
- You need not to submit income proof means gold loan can be applied by non-income persons.
- CIBIL score not check for granting gold loan.
- The gold loan interest rate is very low as compared to other loans like personal loans etc.
- Your gold articles will be safe in the bank custody.
- You can pay your gold loan in EMI or lump sum.
What are the disadvantages of gold loans?
1) Sometimes the borrowers cannot pay the loan amount in future or even interest amount will not pay then the bank can sell the gold article as per the agreement with the bank and recover the gold loan amount.
Bank gives notice to the borrower before
selling the gold. If the borrower does not pay the gold loan amount then the bank
sells the pledged gold.
2) There
are rare situations when gold prices go down, if such happening then you have
to maintain the loan to value ratio i.e. 80% of gold articles value. You need
to return some principal value to the bank.
3) Banks
sanction gold loans as per loan to value ratio. So your gold loan is always
less than the market value of gold.
Conclusion
During the gold loan process you need to complete the formalities for approving the gold loan. It has easiest procedure of gold loan as compared to other loans in any emergency situation.
You have to pay less interest, you can
avail facility of EMI on lump sum repayment and insurance also. There are some
disadvantages but its benefits are much more.
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