What is a gold loan?
A gold loan is a secured loan where you pledge your gold ornaments or coins as collateral to get instant cash. The loan amount is typically 60-80% of the gold's market value. It's one of the easiest and fastest ways to get a loan.
What is LTV ratio in gold loans?
LTV (Loan to Value) ratio is the percentage of the gold's market value that you can borrow. For example, with 75% LTV and gold worth ₹100,000, you can get a loan of ₹75,000. Higher purity gold typically gets better LTV ratios.
What documents are required for gold loan?
Typically required documents include: Identity proof (Aadhaar, PAN, Voter ID), Address proof (Aadhaar, utility bills), and Gold ownership documents if any. Some lenders require only ID proof and PAN card for loans up to ₹2 lakhs.
What is the typical tenure for gold loans?
Gold loans typically have short tenures ranging from 3 months to 5 years. Most lenders offer 6 months to 2 years as standard tenure. You can usually renew the loan after maturity by paying interest.
How is gold loan interest calculated?
Gold loan interest is typically calculated on a monthly reducing balance basis. Interest rates range from 10% to 24% per annum depending on the lender, loan amount, and your credit profile. Some lenders offer lower rates for larger loans.
What happens if I don't repay the gold loan?
If you fail to repay the gold loan, the lender can auction your pledged gold to recover the outstanding amount. However, lenders usually send multiple reminders and offer renewal options before taking such action.
Can I get 100% of my gold value as loan?
No, lenders typically provide 60-80% of the gold's market value as loan. This is to protect their interest in case of default. Higher purity gold and established customers may get better LTV ratios.
Are gold loans safe?
Yes, gold loans from reputable banks and NBFCs are safe. Your gold is stored in secure vaults and insured. Ensure you get a proper receipt and understand all terms before pledging. Compare interest rates and processing fees before choosing a lender.