Legalized lenders like banks and Non-Banking Financial Companies have provided loans against gold for more than seven or eight decades. But even before that, Indians had the practice of receiving money by pledging gold to the bourgeois. That later led to making gold loans official. The loan is granted for a specific period within which the borrower should pay the principal and interest amount. The interest is procured for the loan availed and varies from one financier to another. A loan is generally easy to avail of and use if you meet the eligibility criteria to the mark and meet all the other requirements a bank or NBFC requests. A gold loan is one among the thousand different loans available, and it has eligibility criteria like all the others. The applicant should have Indian citizenship proof to avail of the loan from an Indian bank or NBFC and have valid id proof, but the employment requirement is not one. The applicant doesn’t need to be a job employee or employer to apply for the loan or avail of the loan. According to the RBI, a person can take out a gold loan even if they have no monthly or yearly income.
Unemployed, homemakers, unstable job employees or low-income individuals can avail of this loan just like any other customer. To avail of a gold loan, employment proof, income proof, a bank statement is unnecessary. A three-digit score that summarizes a whole report of the customer’s personal information, banking information, employment information, past credits(loans pr debts) is a CIBIL score. The score is primary for availing of most loans as it represents the borrower’s capability in repayment. A good score is above 700, and a bad score is below 600. Loans like personal loans or car loans demand this score to be a minimum of 750 to avail a maximum loan amount. But it is unrequited for a gold loan as the loan is secured and the collateral is ironclad. And because of its minimum documentation requirement and easy procedures, processing a gold loan is speedy. The principal is disbursed immediately after the loan approval.
The loan amount of a gold loan is upto 90% of the asset’s value to a maximum of Rs1 crore in most banks and NBFCs. The Loan to value ratio depends on the weight and the purity of the gold article. A minimum of 18k and a maximum of 24k purity is necessary. The weight of the gold is unlimited, and the gold rate of that day weighs a part in the value of the gold. The loan term for a gold loan varies from 3 months to 36 months in most banks and NBFCs. The tenure is short and compact compared to many other loans, and it is also another reason for its vast popularity besides the least requirement for eligibility criteria. The gold loan interest rate starts from 7% per annum to 20% per annum, depending on the principal amount and tenure. It also varies from one lender to another. A Gold loan calculator on the bank’s or NBFC’s official website provides more light on the gold loan details. The processing fee is procured for the application’s processing and approval. It goes as high as 1% of the loan amount or a fixed charge like Rs 250. The prepayment charge is incurred if the borrower closes the loan account before the original maturity date of the loan. A gold loan preclosure fee is NIL in most banks and NBFCs, but a few charge up to 1% of the outstanding loan amount.
Conclusion
A Yes Bank gold loan is an eminent gold loan in the finance market and is well-praised for its affordable interest rates and other attractive features. The bank is highly reliable and has millions of customers vouching for its trustworthiness.
Also read this: Best Way To Use Gold Loan