Date:06/06/2023

Gold loans are an excellent financial option that allows individuals to mortgage their gold assets to meet their immediate cash requirements. In this article, we will explore which products of gold are eligible for a loan and for what purposes.

1. Gold Loan Against Jewelry:

Loan against jewelry is one of the most common gold loan types. This loan option allows borrowers to pledge their jewelry as collateral in exchange for funds. The lender determines the loan amount based on the market value and purity of the jewelry on the basis of carat and grams.

One can easily access these loans from banks, non-banking financial companies (NBFCs), and other financial institutions. The loan tenure and rate of interest vary from lender to lender based on the purity and gram.

2. Gold Loan for Farmers – Agricultural Purposes:

This type is specifically for agricultural purposes. This credit facility is especially to fulfill the needs of farmers and agriculturists. These loans provide financial support to individuals engaged in farming activities. The loan amount is determined based on the agricultural land owned and the value of gold pledged. The minimum purity of gold required is 18 carats.

The interest rates are usually lower compared to regular loans.

Additionally, some lenders offer flexible repayment options, considering the seasonal income patterns of farmers.

3. Gold Overdraft Facility:

In a Gold overdraft, one can have access to funds based on the value of their assets. The lender sets a credit limit, and the borrower can withdraw funds as needed, up to that limit. Interest is charged only on the amount withdrawn, providing flexibility and cost-effectiveness. As the borrower repays the loan, the credit limit is refilled, making it a rotating line of credit.

Conclusion:

Gold loans come in various forms to fulfill the diverse financial needs of individuals, be it for personal or business purposes. Understanding the different types, such as loans against jewelry agricultural purposes, and overdraft facility, enables borrowers to make informed decisions based on their requirements and financial circumstances. Before opting for a loan, consider the rate of interest and terms and eligibility criteria that suit your needs.