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Questions (FAQs) on
What is Gold Loan ?
Gold Loan is a borrowing or loan taken against gold or gold ornaments as collateral. So this way, Gold Loan is a kind of secured loan where the security given is in terms of gold. You can pledge your gold jewelry, gold bars, gold coins, gold biscuits etc with a bank or a financial institution which offers gold loan and against the value of the gold kept by you, the financing institution may apply a haircut of 30-40% and for the remaining amount of 60-70%, you may get cash as the loan amount.
The banks or the financing companies levy haircut as their risk management procedure since the gold may have some impurity and also the price of the gold may keep fluctuating.
Which banks or institutions offer gold loan in India ?
Taking gold as a pledge and then safely storing it till your repayment is done is not that easy and that’s why not all banks offer gold loan in India. Some of the most popular gold loans are :
Muthoot Finance Gold Loan | Mannapuram Gold Loan | ICICI Bank Gold Loan | HDFC Bank Gold Loan | IndusInd Bank Gold Loan | SBI Gold Loan | Axis Bank Gold Loan | Federal Bank Gold Loan
Muthoot Finance & Mannapuram are RBI registered NBFCs who are exclusively in the business of mortgage against gold or gold finance or gold loan.
What is the process of Gold Loan application & disbursal ?
Since Gold Loan is a kind of secured loan or you can mortgage, so the risk elements for the bank or financing institution is not that high. Considering this the process is relatively easier and the documentation is also not very complicated. Most of the banks or financing institutions offer gold loan upto a value of 1 Crore. The interest rates of the gold loan generally keeps changing and presently it is around 10% but varying across banks.
To apply for a gold loan, all you need to do is to go to bank or gold loan financing company such as Mannapuram or Muthoot. You need to give your gold there for a quick purity check & weight measurement. Thereafter the bank or finance company officials tell you the value of the gold as per their definition and anywhere between 60 to 90%, they may approve you as a Gold Loan amount. This also depends on your existing relationship & past history with the bank. The disbursal of Gold loan is also very quick and it takes less than an hour to get the complete formality and receive you loan amount.