Lending and borrowing have been going on for centuries. People have been trading goods, in exchange for money or any other resources. In recent years, we have come across the concept of Gold Loan. The concept of pledging gold for money has been going on for a long time now. Gold loans are loans granted in lieu of depositing gold with banks or with any NBFCs. Gold is a heavy metal, which carries great importance and value, especially in Indian Households. It can be tagged as a safe haven, with the auspicious sentiment it has attached with it, and also the possibility that it be used for the long term, not only as jewellery but also can be used for buying loans.
As compared to other loans, gold loans are much cheaper, mainly for short-term credit seekers. In most of the households, gold is lying like a layman. One can capitalize the gold lying ideally in the house, with better alternatives, for example by taking up a gold loan and use it elsewhere. But, before entering into a new territory proper knowledge is necessary, so it is very mandatory for any individual to have a good deal of understanding about gold loans.
First things first, it is important to understand the requirements through which one can get a more clear picture while applying for a loan.
- A gold loan can be claimed without any income document, unlike applying for other loans, when applying for a gold loan one mustn't need to provide any income proof.
- To avail a gold loan, certain documents are required to be provided which are, Aadhaar card/PAN card/voter id/ Passport copy.
When getting a loan, there are certain things which are needed to keep in mind.
- The gold must be pure, as lenders offer loans up to 80% of the value of the gold after checking it.
- The interest on the loan can vary from 13-16% per annum.it is usually repayable in 12-60 months in equal instalments and includes interest and principals.
- Any person who is aged above 18 who has gold can apply for a gold loan.
As both banks and NBFCs provide loans, one must find it difficult to choose between them. The borrowers should keep in mind that banks have an advantage over NBFCs because the rate of interest charged by them is comparatively lower. This is so because the banks are able to raise funds at lower rates than NBFCs.
Various banks have different schemes when it comes to loans. ICICI gold loans provide gold loan per gram, depending on the purity of the gold. Persons aged between 18-70 who have gold can apply for this type of loan. A maximum loan which the bank provides is up to 15 lakhs.
Before applying for gold loans, one must go through detailed information regarding gold loans which would help them in the longer run.
