There is no doubt that Indians love gold. Every household loves gold in some form or the other. With the festive season around the corner, lenders are offering monetisation of gold, which is the form of a gold loan.

It is very famous among the people hailing from smaller towns and cities owing to the ease of applying for the gold loan offers. Most banks and NBFCs provide these loans to people as a short-term avenue for raising funds. Though it is easy to raise funds with this loan, it is better to learn everything about the loan before getting the right one this festive season.

• Gold loans are the funds given against hypothecation of the gold. This means the gold should be kept as security with the lender. The loan value depends on the gold value.
  
  
• They are secured loans and kept physically with the lender. The latter party is obligated to keep the gold securely with lock and key.
  
  
• The loan amount depends on the purity and quantity of gold. It gets independently valued by the lender and the funds given depend on the gold value. Some lenders have the rule that they provide loans against specific karat of god while others may accept different purities of gold.
  
  
• Lenders do not provide the entire gold value as the loan. Approximately 60 per cent to 80 per cent of the gold value is given as a gold loan. The best gold loan offers during this festive season could be up to 90 per cent as well. Such percentage is called the loan to value ratio and differs from lender to lender. The information gets displayed on the lender’s portal. However, most lenders do not pay for gold appraisal charges. The borrower should bear the cost.
  
  
• There is not too much documentation involved. There is no income proof needed. The standard document is Know Your Customer (KYC) for availing the loan. This makes it easy for people to access since there are no strict income limitations while applying. Once you present the documents and the gold, the lender disburses the funds immediately.
  
  
• No matter the gold loan offers, there are different repayment types, i.e. only interest during the loan tenure and principal payment at the end, standard EMIs, no fixed repayment schedule, etc. All this depends on the lender, however. The information will be available on their portal. If you opt for the standard EMI schedule, use the EMI calculator for finding the monthly instalment amount. If you are sure of paying off the loan, then opt for bullet repayment, which is the no fixed repayment until the loan gets closed.
  
  
• Some lenders also have liquid loans in place which works like an overdraft facility. The maximum overdraft depends on the gold value. However, the interest gets charged on the amount drawn from the overdraft.
  
  
• Besides the interest rates, there are other charges like processing fees, foreclosure fees, late payment fees, etc. which could differ under the best gold loan offers for festivals. Lenders display these charges on their website, and it is best to check them before applying.
  
  
• It is simple to apply for such loans. Such an application gets done both online and offline. It is possible to use from the lender’s portal. However, the gold should get physically deposited with the lender for availing the funds.