Gold Loan India Review

Gold Loan India Review

Gold Loan means borrowing against Gold. Gold is a precious metal class and up to now, in India the Gold Loan market was highly un-organized. But in the past few years this market started becoming organized after major Indian banks entered into this market.

In Year, 2009 the organized gold loan market was Rs.25,000 crores which is growing at 38% compounded annually and by the end of 2011, this will become Rs.50,000 crore market.

The main advantage of gold loan in India are as follows.

01) Convenience -

The first advantage of taking a loan against gold is the convenience. Here you just have to pledge your gold with the lender (Bank or Private finance institute) and that’s it. You can get a loan up to 80% of its market value immediately.

02) Low Interest Rate -

Another advantage of taking a gold loan is that, it comes with low interest rates. The gold loan interest rates in India are 10-24% annually in comparison to the personal loan interest rates which are 12-26% per annum.

Not only this but with the gold loan, you have an option to pay only interest during the tenure of the entire loan and at the end of tenure, you can pay the entire borrowed amount in a single shot.

This kind of feature is never available in any other kind of loans.

03) No Income/Salary Requirement -

One great advantage of taking a gold loan is that, you don’t need to qualify for any income criteria. This is because here you are pledging a gold, a valuable asset. So you will immediately get a loan from the lender even if you are unemployed and unsalaried.

Which Indian Banks/Institutes offer Gold Loan?

Several Banking and private finance institute offers gold loans at attractive interest rates. Here is a list.

Banks:

01) SBI
02) ICICI
03) HDFC

Private Finance Companies:

01) Muthoot Finance
02) Manappuram Finance

Banks will ask for a ID proof while with the private lenders, you can get a gold loan in just few minutes hassle free.

Dos & Dont’s of Gold Loan

- Go for a gold loan only if you don’t have any other option to raise money. This is because gold has an emotional value and if you default, you will loose control over this precious asset class.

- If you have a bad credit history and low income levels than also you can go for this kind of loan.

- Don’t borrow money against gold for speculative investments like stock market trading or anything else.

The gold loans are now the top choice for raising money in all the classes of people in India. Another fact about gold loan in India is that, people have an emotional attachment with this asset class and that’s why they are less likely to default with this asset class.

One more advise I would like to give readers is that, if possible don’t go for loan against your gold jewellery. This is because in case of your default, the lender will sell that jewellery and this is a psychological disturbing event.

However, also keep in mind that if you don’t have enough confidence to repay that principal amount and the interest payments than simply don’t go for the gold loan. Because you will lose this precious metal.