Commonly Asked Questions Regarding Gold Loan
A gold loan is a loan against gold in which a customer deposits the gold jewellery as security with a gold loan company. In return, the company gives a loan amount to the customer as per the market value of gold. Taking a gold load is quite easy and secured, and has been a financial practice for long in India. A lot of people pledge their gold ornaments to the financers in order to arrange funds to meet an exorbitant emergency expense or to even start a new business. You can get a gold loan from banks and also from non-banking financial companies (NBFCs).
Though it is simple to buy a gold loan it is helpful if you have some prior knowledge regarding the facts and also the procedure that is involved.
Below are Some of the Common Questions that a Lot of Buyers Would have Regarding Gold Loan:
Q1. What is a gold loan?
Ans: When you keep your gold ornaments as collateral against the money that you buy from a lender for a specific tenure. The buyer then repays the loan amount to the lender bank along with the applicable interest rate till the end of the loan tenure.
Q2. Who is eligible to get a gold loan?
Ans: You can apply for a gold loan if you are a trader, businessman, salaried employee or self-employed or a farmer. The age criteria vary from one bank to another, however, you can get a loan against loan if you are between 18 and 60 years of age.
Q3. What documents are required to apply for a gold loan?
Ans: Below are the documents that you need to submit when applying for a gold loan:
- Two Photographs
- Gold loan application form to be duly filed by the applicant
- Identity Proof/ Pan Card/Aadhar Card
- Borrower’s Address Proof
Q4. What is today gold rate in Hyderabad?
Ans: The gold rate in Hyderabad today is Rs. 38,930 for 10g of 24 carat gold. It is recommended that you check the gold rate before buying a loan against gold.
Q5. When should you apply for a Gold Loan?
Ans: Below are some of the reasons to apply for a gold loan:
- When you need a loan on an urgent basis for a shorter span of time
- If you have gold ornaments that you are willing to pledge
- In case you want to skip cumbersome paper work as gold loan requires basic KYC documents
- No CIBIL score or credit history required
- If you want to reduce your borrowing cost
- There is no pre-payment penalty or processing fees in A gold loan, which reduces the overall cost of the loan
Q6. When should I not opt for a Gold Loan?
Ans: Taking a gold loan is a bad idea if you:
- Are looking for a loan duration of more than 36 months
- Do not trust handing over your gold ornaments to a third-party/bank/NBFC. However, it is quite safe to keep your jewellery with a bank or specialized finance companies.
- Are not comfortable with the restriction of not being able to use your jewellery during the loan period
- Have alternative assets where you can pledge your gold at a lower interest rate
Q7. How is interest calculated on Gold loan?
Ans: The formula to calculate interest on gold loan is simple: Total amount to be paid - Principal amount. To calculate the amount that you need to pay at the end of the policy tenure you can also use the gold loan, online interest calculator.
Q8. How is EMI calculated on Gold loan?
Ans: It is quite easy to calculate your Gold loan EMI’s using an online EMI calculator. There are higher chances of mistakes when doing it manually. Therefore, it is better to use an online EMI calculator. The following information is required when using an EMI calculator:
- Rate of interest
- The loan amount
Q9. What determines the Gold rate in Pune?
Ans: Gold prices in Pune get affected due to a number of global factors including the pricing of the metal in the international market and the price of rupee against the dollar. So, gold rates go up internationally go up, gold rate in Pune rise as well. To stay updated it is better to check gold related news and gold rates online.
Q10. What is Gold Loan EMI Calculator?
Ans: EMI on Gold Loan is the amount that you need to pay every month to a financial institution or bank from where you have taken the loan. It is the amount that you need to repay to the concerned bank or NBFC. EMI amount includes both the interest component and the principal amount. The interest component is on a higher side in the initial months and gets reduced with subsequent EMIs.
With an EMI Calculator, you can calculate your monthly EMIs for a particular duration at a given interest rate. Your EMI depends on the loan tenure, loan amount, and the interest rate:
- Interest Rate- Higher gold loan interest rate means a higher amount of EMIs
- Loan Amount- High EMI amount for a higher gold loan amount
- Loan Tenure-EMI reduces if the loan tenure is more
Q11. What happens if a gold loan is not paid?
Ans: If you miss repaying your gold loan in time then it will reflect on your credit score. The lender bank will report this to the Credit bureaus, which will drop your credit score (as it will effect negatively on the credit score).
So, the next time when you are planning to apply for a gold loan, you can go refer to the above-guide. The above-mentioned questions are the common doubts that most of the buyers have. Therefore, we thought of answering to make it easier for you to avail loan against gold.
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