Know About the Best Gold Loan Scheme offered in India

Know About the Best Gold Loan Scheme offered in India

Besides prominent macroeconomic factors like GDP, the gold reserve of a country also indicates its economic state. As of June 30, 2021, the Reserve Bank of India’s gold reserve accounts for 705.6 tonnes.

Similarly, most Indian households possess some gold, which allows them to monetise during a financial emergency. Since it prevents the need to sell off gold, the demand for gold loans rises. Almost all leading financial institutions, including NBFCs in India, extend a gold loan. 

Hence, it often becomes challenging for intending borrowers to choose the best gold loan scheme. Hence, they should learn the features of this financial product in detail before applying. 

Features of the best gold loan schemes in India  

The best gold loan scheme comes with the following features –

  • High sum

Gold is a highly liquid asset, and therefore by pledging it, individuals can qualify for a substantial loan amount. Primarily, the loan amount depends on the LTV a lender offers, which as per current RBI directives, stands up to 90%.

It means, if you mortgage gold worth Rs.1 lakh, you can get a credit of up to Rs.90,000. However, it depends on factors like the choice of lender and the purity of gold items.

As per a report, for the June quarter of FY2020, the average gold loan LTV of 5 top NBFCs was 55% to 60%. However, the RBI’s updated guidelines to extend it to 90% have helped borrowers secure more funds.

Hence, to ensure opting for a favourable gold loan scheme, individuals should check the LTV of their respective lenders.

  • Reasonable interest rates

One of the best features of a gold loan scheme is its affordable interest rates. Although it varies with lenders, you should compare and settle for the most competitive one to keep the interest outgo under check. 

Usually, the interest rate depends on the gold loan amount, metal’s purity and likes. 

  • Convenient repayment 

The best gold loan scheme in India accompanies various repayment options. You can pick one of the following to repay the debt.

  1. Choose the regular EMI scheme
  2. Pay the interest upfront and principal at tenor’s end
  3. Select to pay interest periodically and principal later

NBFCs like Bajaj Finserv offer all these repayment options for a gold loan. It allows borrowers to choose an option compatible with their repayment capacity. 

  • Simple eligibility and documentation 

One of the perks of opting for a gold loan is its easy-to-meet eligibility criteria and simple paperwork. Although it changes with lenders, the following are some eligibility parameters that individuals need to fulfil:

  1. The age of applicants should be from 21 to 70 years
  2. Salaried/self-employed/business person/farmers/traders are eligible for this credit 

Individuals should also submit a list of documents like address proof and identity proof to be eligible for this credit. Lenders also assess the purity of gold items before loan approval. Usually, they accept gold ornaments of 18 carats to 24 carats. 

  • Improved security 

Considering the safety protocols maintained by a lender for pledged gold helps to choose the best gold loan scheme. Selected financiers adopt industry-best safety measures. For instance, they store the gold in a vault which is under 24X7 CCTV surveillance, and the room is also equipped with a motion detector. Also, they use advanced GPS-enabled containers to transport these gold items. 

  • Part-release facility 

Most leading financiers offer part-release facilities wherein you can release a part of the pledged gold by repaying equivalent amounts. Thus, you do not have to wait till the tenor end to get your hands on the gold kept. 

  • Safe gold appraisal process 

Selected financial institutions also offer doorstep services for a gold loan. With this facility, the representatives of the lender visit applicant’s address with an industry-approved carat meter. It ensures the gold appraised is accurate and authentic. Also, it reduces the need of visiting any branch office with gold items.

  • Quick loan processing 

Gold loan processing is a quick and straightforward process with doorstep services, minimal paperwork, and simple eligibility checking. However, individuals can expedite the processing by opting for an online gold loan

  • Zero hidden charges

The best gold loan scheme also ensures that you do not have to pay any hidden charges. Leading financiers do not impose additional charges on part-prepayment or foreclosure. Eligible candidates can also qualify for a top-up loan. 

  • Complimentary gold insurance policy 

Selected financial institutions also provide complimentary gold loan insurance policies against misplacement or theft for the entire tenor. This is another remarkable feature that increases the popularity of this financial product. 

Therefore, considering the factors mentioned above, individuals can bag the best gold loan scheme in India. Additionally, they can also use online calculators to find their repayment amount in advance or the loan amount they can qualify for. 

Additional Read: GHMC Property Tax: What are the Steps to Pay GHMC Property Tax?