Gold loan, also known to as “Loan Against Gold“. It is a type of secured loan. Gold loan is always availed by pledging gold ornaments with the lender in exchange for money. You can pledge your Gold ornaments, jewellery, coins, and bars to avail of the gold loan. Your gold loan would be as safe to the lender until you repay the loan amount.

Gold loan is similar to a personal loan, there is no restriction in using the money. You can use the gold loan funds for paying medical bills, Tuition fees, purchasing a car, renovation of home and emergency needs.

Features of Gold Loan:

1. Secured loan: – Gold loan is one of the type of secured loan. Your CIBIL score does not matter in this. It does not matter if your poor score. All you need to have physical gold to lend. A secured loan is offered at a lower rate of interest.

2. Flexible Repayment: – You can repay the loan either by EMI or pay regularly the interest and principal amount lump sum at the end of the loan tenure. Gold loans are popular for this flexible repayment.

3. Quick Processing: – Gold loan lenders do not bother about the Credit score as it is a secured loan. Paperwork and other formalities involved in gold loan processing is very minimal. This is because the lender gets your gold in exchange for money.

4. Quick Disbursal of loan: – Gold loan can be disbursed within 10 minutes as the documentation work is very less.

5. No restriction on funds utilization: – Funds received as gold loan can be used for any purpose. You can use funds for purchasing a car, renovation of home, medical expenses, and education expenses.

The loan amount and interest rates
The loan amount varies from organization to organization. It depends on where you “Apply For Gold Loan“. The loan amount will vary if you get it from a lender or a bank/financial institution. Both private and national banks offer gold loan. The amount sanctioned will be decided after verifying the purity and weight of the gold bars or ornaments. Then the current market rate for gold will be considered based on which you will get a loan. The majority of the lender and banks/financial institutions offer 75% of the value of the gold, which is pretty good!

Again the interest rate will also differ. Private lenders tend to charge higher interest rates than banks. It is a better option to get a gold loan from a bank than from a private lender. Banks levy less interest rate due to the nature of the loan. A gold loan is a secured loan. Hence the interest rate is pretty low compared to other types of loans.

Repayment of loan amount
There are different ways you can pay off the loan. You can either pay the whole amount along with interest at the end of the tenure or may choose EMI. Banks give you more options when it comes to repayment of loans than private lenders.