Gold in India has always been the best and safest option of investment. We as Indians have a personal attachment with our gold jewelry. Life is full of uncertainties and what better option than using your gold to tackle such uncertainties in times of need.
Gold Loan or Loan against gold is a simplest form of pledging your gold as collateral to avail instant cash. Gold loan is always a safest option to take as compared to any other loan, as you give your gold to the lender as collateral. Gold loans not exceeding 75% of the value of the gold deposited can be given out. Usually the percentage differs from lender to lender; for instance you want a higher loan amount, there might be lenders offering you a higher percentage. This is how usually the calculation goes.
Things to keep in mind
1. Compare: The first and foremost thing to do is to compare per gram rate from various lenders. Different lenders offer different rate of each gram of gold. You need to choose the lender which gives you the highest amount of each gram of gold. Followed by which you have to compare the loan amount or the LTV borrowers can get in return of his/her gold pledging.
2. Choose a lender of the organized sector: While comparing it’s also very important to do a background check of the lender as you would be handing over your valuable gold to them. There are several lenders that are offering gold loan at attractive rates, but do not get carried away by the shine of their attractive offers as they may be conning you by giving attractive offers. Therefore it’s always advised to go to a reputed lender; there are many nationalized and private players in the market who you can trust with your gold.
3. Interest and other charges: Usually lenders charge upto 1% on processing fees. And interest rate differs from lender to lender. Just like when you are comparing various borrowers you have to keep into consideration the interest rate of each lender. The lower the better. Your repayment amount shall depend on the interest rate. Also make a note on how is the interest rate calculated.
4. Repayment options: Customers can opt for repayment options through cash or online. If the customer chooses cash payment, so he/she has to keep a note that as per RBI, Rs. 1.99 lakh cash payment is only allowed. And if it is more than Rs. 2 lakh then, only online payment has to be done like RTGS/NEFT etc. Repayment can also be made using company’s digital payment mode by going on the company’s website.
5. Importance of Gold Pledge card: A Gold Pledge card is the most important document that is given to a customer. It’s an agreement copy between lender and customer. The agreement consists of ornaments pledged and cash received against the collateral.
The rate of interest, terms and conditions are clearly mentioned so that there would not be any complications further.
It is mandatory to present this agreement when releasing the ornaments; hence it is very important to keep it safe.
6. Different ornaments that can be pledged: Gold ornaments which are having 22 to 18 carat are accepted. Every ornament purity is evaluated by the authorized appraiser and based on the appraisal a maximum of 75% LTV can be given. Also remember that gold coins irrespective of the carat cannot be accepted for pledge.
7. Grace period and Interest due dates: There might be lenders who offer grace period which simply means offering some extra days further than the due date. Grace period might be yes/no for different lenders. However, the interest due calculation will also change if the customer misses his due payment.
Once you have made a checklist of the above points, you can go ahead with the application process.
Click to apply for a Gold Loan here or Click to choose from Fedbank's wide variety of Gold Loan schemes