A gold loan is a type of secured loan that allows individuals to borrow funds by pledging their gold ornaments, coins, or bars as collateral with a lender, typically a bank or a non-banking financial company (NBFC). The loan amount is usually a percentage of the gold’s current market value. Gold loans are popular because they provide quick access to funds without the need for a detailed credit check or income verification.

• Collateral: Gold loans are secured loans, where the borrower’s gold acts as collateral to secure the loan. The lender holds the pledged gold until the borrower repays the loan in full.
• Loan Amount: The loan amount offered is based on the purity and weight of the gold. Typically, lenders offer up to 70-80% of the gold’s current market value.
• Interest Rates: Gold loans generally have lower interest rates compared to unsecured loans like personal loans because the gold serves as security for the lender.
• Repayment Terms: Gold loans usually have shorter repayment periods compared to other loans, often ranging from a few months to a few years.
• Minimal Documentation: Gold loans require minimal documentation, making the application process quick and straightforward.
• Quick Disbursement: Gold loans are known for their quick disbursal process, enabling borrowers to get the funds they need in a short period.
• No End-Use Restrictions: Unlike some specific-purpose loans, gold loan funds can be used for any personal or business need.
• xml_set_processing_instruction_handlerLoan Renewal: Some lenders offer the option to renew or extend the gold loan by paying the interest due at the end of the loan term.
• Risk of Default: If the borrower fails to repay the loan within the agreed-upon period, the lender has the right to sell the pledged gold to recover the outstanding amount.