Kolkata: Thanks to rising gold prices, the value of gold loans sanctioned by banks in India jumped by 68% in the period between April and December in 2024. NBFCs are also not far behind in this respect. It is clear why rising prices attract more application for gold loans — the same amount of collateral can fetch the borrower more money than it could when prices are down.
However, before proceeding to a bank, or NBFC, to offer the precious metal to get a loan, it is necessary to know a few things about gold loans. It is also important to know the repayment modes available. Let’s have a look.
How much gold loan per 10 gram
There is no straight cut answer to this frequently-asked question. How much loan a borrower will get by offering gold as collateral will depend on a few factors. These are:
Purity of gold: The higher the purity — the higher the gold content — the higher value it will fetch. Certainly 24-carat gold will fetch higher amount than 22-carat gold. Anything below 18 carat is not entertained to give loan against.
Market price: The market price of gold will also determine the loan that you are eligible to get. It is a dynamic market with price varying every day.
Loan-to-value ratio: Referred to as LTV ratio in banking parlance, it is the percentage of the gold’s value that the lender will lend at a maximum. No lender will lend you the full value of the metal. It stands at 75% now. It means, if the value of the gold that you offer as collateral is Rs 100, the bank or NBFC will offer you a maximum amount of Rs 75.
Repayment options for gold loans
Gold loans are secured loans. They also offer a variety of repayment options. usually these are:
EMI mode: One has too make equal monthly instalments as in other types of loans such as personal loan or housing loan
Bullet mode: In this mode, the borrowers need not pay interest and principal periodically during the loan term as is done in the EMI mode. The borrower can settle the entire outstanding amount at one go when the tenure ends. Experts point out that since this mode does not involve reducing balance calculations, the borrower could pay higher interest amount.
Pay interest as EMI, principal later: “Under this form of repayment of gold loan, you are permitted to repay the interest due on the loan as per the EMI schedule given by the lender. However, you can make a single payment to pay off the principal amount,” says HDFC Bank.
Partial payments: The borrower need not pay EMIs, but can make partial payments of interest and principal amount as and when he/she is able to.
Gold loans are one of the fastest rising loans in India. As the price of gold has been rising for more than a year, many have been pawning gold to unlock it value, mostly in the form of gold jewellery. What is the maximum loan that you can tract from your gold and what are the repayment options? Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
