All about gold loans: Min, Max limit, penalties, lock-in period

There is no way to escape the reality that gold loan help is a significant asset to one's financial portfolio. Even though most individuals buy gold jewelry for sentimental reasons, having items of this kind can serve as a safety net for you when times are tough financially. A gold loan will be of little assistance in these crises. Let’s find out the answer to most common gold loan faqs!

Almost anyone can obtain a loan secured by gold. You will need to put up your jewelry as collateral to receive a gold loan. The fact that these loans are secured by collateral means that their interest rates are often lower than those associated with personal loans. After you have paid the loan, your ornaments will be returned to you in perfect condition.

Minimum and maximum limit of gold loan

It is imperative that you compare the interest rates, qualifying conditions, and maximum and minimum gold loan amounts offered by different NBFCs and banks that provide gold loan help services. A minimum and maximum gold loan amount limit might be established in advance for every lender. In the case of gold loans, ICICI Bank offers amounts ranging from 10,000 to 1,000,000 rupees, while the SBI offers amounts ranging from 20,000 to 50,000 rupees for customers to borrow against their gold holdings.

Charges and Penalties Applied Internally:

• The borrower will be responsible for paying any applicable stamping fees incurred.
• The lender will assess fees related to the credit evaluation process. There will be a charge ranging from a minimum of Rs. 350 to a maximum of Rs.1,000.
• Commitment fees of Rs. 1,250 each quarter or 0.50% per quarter will be applied.
• If the loan amount is late, a late fee of three percent of the total overdue amount will be assessed.
• There is the possibility of imposing a collection fee not exceeding thirty percent of the total amount that is past due.
• There will be a dishonor fee assessed of 750 rupees for each occurrence.
• You may be charged a swap fee of Rs.500 for each occurrence.
• If a no-due certificate is necessary, a fee of up to Rs. 50 may be demanded from the applicant.

Lock-in period in Gold Loan

Generally, there are no lock-in periods associated with gold loans, and the repayment terms are pretty brief. The maximum length of time for a gold loan is five years. The loan account will be considered closed once you have deposited the remaining loan amount and the interest due after your repayment term. The gold items pledged will be returned to the borrower once the loan has been satisfactorily repaid.

Wrapping Up

Gold continues to be the most popular form of investment for the vast majority of Indian households. In addition, the price of gold is in a state of perpetual fluctuation, which provides investors with numerous opportunities to purchase the glittering metal. When viewed over time, gold presents a lucrative possibility to obtain financing. Gold loans can be innovative instruments that can aid individuals going through a credit crunch in several ways, including securing money for unexpected medical expenses or paying for a child's education. Even legal entities such as corporations can meet their working capital needs by taking out gold loans or registering for overdraft facilities based on the value of their gold holdings. We hope our article helped you with your gold loan faqs!