How is a gold loan taken? Which formalities have to be completed? How is its duration and interest rate determined? - Loan Trivia

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Friday 16 June 2023

How is a gold loan taken? Which formalities have to be completed? How is its duration and interest rate determined?




In India, gold has developed from a valuable metal used to create exquisite jewellery to an incredibly popular financial tool. In addition, if you need cash quickly for business purposes, unanticipated bills, or a medical emergency, you may get a Gold Loan and meet your demands on your own with the required gold loan documents.

How a Gold Loan Works

Guaranteed loans

Banks levy an interest rate, and after the loan is repaid in full, they return the jewels. 

Accepted gold type

The sort of accepted gold is another crucial aspect of a Gold Loan that you must understand. In addition, the gold offered as collateral should have a purity of 22K or more. 

Maximum Loan to Value Ratio offered by financial institutions

Most banks provide Gold Loans with a maximum loan-to-value ratio of 75% of the gold's current market price. Therefore, if you end up mortgaging gold worth 100,000, you may get a maximum loan of 75,000. 

Evaluation of Gold and loan approval Procedure 

We must include the assessment and approval procedure when discussing how Gold Loan works. After evaluating the gold offered as collateral, the bank calculates the maximum loan amount and the applicable interest rate. You can choose a loan payback term between 6 and 12 months as the borrower.


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