💰 5 Things to Know Before Applying for a Gold Loan: A Must-Read Guide by Vizzve
Gold has long been more than just a cherished ornament in Indian households. It's a financial lifeline. Whether you're facing a cash crunch, planning a wedding, or funding a small business, gold loans offer a fast and secure borrowing option.
But before you hand over your gold for cash, there are 5 critical things you should know. Let’s decode them.
🟡 1. Loan-to-Value (LTV) Ratio – How Much Loan Will You Get?
Banks and NBFCs generally offer 75% of the gold’s market value as loan, as per RBI guidelines. This means if your gold is worth ₹1 lakh, you might get up to ₹75,000 as a loan.
Pro Tip: Rates and LTVs may vary based on lender policies and market volatility. Always compare before choosing.
🔐 2. Interest Rates: Lower Than Personal Loans, But Know the Type
Gold loans usually have lower interest rates compared to personal loans, starting from 7% to 14% p.a. However, interest can be:
Flat rate: Fixed interest on the principal.
Reducing balance: Interest reduces as you repay.
Vizzve Tip: Ask whether the interest is monthly, quarterly, or annual. This affects the total repayment significantly.
📆 3. Repayment Options – More Flexible Than You Think
You can choose from multiple repayment modes:
EMI option
Interest-only monthly payments
Bullet repayment at the end of the tenure
Each method suits a different borrower profile — ask about all options, not just what’s offered first.
📄 4. Documents Required – Minimal, But Essential
One of the key benefits of a gold loan is the minimal paperwork:
Aadhaar Card / PAN Card
Proof of address
Passport-size photographs
No income proof? Not a problem — gold acts as your security.
🏦 5. Where You Take the Loan Matters – Choose Safe, Trusted Lenders
Not all lenders are equal. Choose banks or RBI-registered NBFCs like Vizzve for:
Insured storage
Transparent evaluation
No hidden charges
Safe gold handling
Avoid unregulated lenders or pawnshops where your gold may be at risk.
✅ Conclusion: Is a Gold Loan Right for You?
Gold loans are fast, secure, and affordable. But understanding the interest, tenure, repayment methods, and lender reputation is crucial. If done right, it’s one of the most efficient ways to unlock financial liquidity in India.
With Vizzve, your gold is not just safe — it's smartly utilized.
FAQs
Q1. Is a gold loan better than a personal loan?
A: Yes, gold loans generally have lower interest rates, minimal documentation, and faster processing compared to personal loans.
Q2. Can I apply for a gold loan without income proof?
A: Yes, since the gold itself is collateral, income proof is usually not required.
Q3. What happens if I fail to repay the gold loan?
A: After the due period and multiple notices, the lender may auction the gold to recover the dues.
Q4. Is my gold safe with the lender?
A: If you choose a trusted institution like Vizzve, your gold is stored in secured vaults and insured against theft or loss.
Q5. Can I repay the gold loan early?
A: Yes, most lenders allow foreclosure, but check if there’s a prepayment penalty.
Published on : August 3RD
Published by : Kaushik
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RBI-Registered Loan Partner | 10 Lakh+ Customers | ₹600 Cr+ Disbursed