There are plenty of borrowing options available in the market with different features and conditions. Each option specialises in financing in different situations and therefore it is very important to research properly before making a choice. Gold loans are one of the most popular loan types in India and you can also transfer gold loan balance from one bank to another..
Gold loan transfer refers to a shifting gold loan balance from one bank to another. You can use this facility when you get gold loan proposals at lower interest rates. The terms and conditions for this feature differ from lender to lender and therefore it is important to go through the terms at the time of loan application.
Various factors like gold loan interest rate, loan-to-value ratio, loan tenure, etc are to be considered when taking a loan. There can be cases where the lenders do not offer the best deal for your gold and in such a situation, it is important to find better alternatives for your current gold loan. Once you find a better alternative as per your gold loan eligibility, you may want to consider a loan transfer.
The procedure for a gold loan transfer from one bank to another is extremely easy and hassle-free. Follow these below-mentioned steps for a gold loan balance transfer:
Firstly you have to distribute your current pledge card to the new lenders to initiate the loan transfer process.
Next, you will have to send a confirmation of the updated loan amount to the lender. After all the details are verified, a savings report consisting of all the insights is shared for review and acceptance.
Once the confirmation is received, you must complete the KYC process. It is mandatory to complete the KYC process properly to ensure a hassle-free transfer of a gold loan. The KYC process can be completed within a few minutes with the help of some documents.
After the KYC process is completed, you will receive a notification regarding the outstanding interest amount that you owe to the original lender. The payment of the outstanding interest amount is mandatory before the gold loan balance transfer to the new lender.
Once the interest is paid to the original lender, the gold loan balance transfer will be successfully made to the new lender.
There are various benefits you can avail of if you opt for a gold loan transfer. Some of these benefits are mentioned below:
Gold articles hold a high level of financial and emotional importance for people. Therefore it is essential to ensure that the gold you keep as collateral is well-insured and kept safely in a bank locker. To ensure this protection, it is important to choose the right lender who provides the feature of special safe lockers, CCTV surveillance and tamper-proof packaging to ensure the maximum security of your gold articles.
The rate of interest levied on gold loans differs from institution to institution. Through the option of gold loan transfer, you can have an opportunity to avail loan at a lower rate of interest. As a result, the number of EMIs will reduce and you will be able to repay the loan amount sooner.
Gold loan transfer also allows you to find a new lender who offers a higher Loan-to-Value ratio in comparison to your current lender.
The eligibility criteria for a gold loan balance transfer varies from one bank to another. However, the common parameters in this regard are:
You must be between the age of 18 and 75 to avail of this facility
You must have made 6-12 Equated Monthly Instalments (EMIs), or 1%-5% of the outstanding principal on your gold loan
The gold should be between 18K and 22K.
To balance transfer a gold loan, you would need crucial documents to initiate and complete the process. Typically, you will have to provide the basic identification documents for KYC purposes. In addition, banks and financial institutions do not ask for income proof.
Ensure to keep these documents handy while applying for a gold loan transfer:
Banks or financial institutions will accept Aadhaar card, voter ID card, passport, driver's licence, and other forms of government-issued photo identification
Utility bill (within the last three months), or other government-approved address proof
Opting for a gold loan transfer is an indispensable way to reduce the overall cost of your loan. However, consider knowing all about this facility before making a decision.
There are various charges involved in the transfer process of a gold loan balance. The amounts of these charges differ depending on the current and new lender. Some of these charges are:
Foreclosure Charges - Also known as pre-closure charges, you have to pay them to the current lender. This charge is levied by the original lender to cover the interest lost due to the early closing of the account. The foreclosure rate for every institution is different but generally between nil to 1%.
Processing Fees - Banks and institutions charge around 1% of the loan amount as processing fee.
Administration Charges - Administration charges are non-refundable charges that a lender levies at the time of loan application. This generally costs between ₹2,500 - ₹6,500.
Yes, a gold loan in most cases is transferable. However, there might be some lenders who do not offer the feature of gold loan balance transfer. It is better to go through the features and conditions of the loan at the time of application.
A gold loan transfer is a good idea if the new lender that you choose offers a loan at a lower rate of interest. This would decrease your EMIs and help you to repay the loan sooner.
Yes, there are a few charges you will have to pay for gold loan balance transfer. These charges include processing fees, foreclosure charges, inspection fees, etc. The amount of these charges differ from lender to lender.
No, a gold loan transfer does not affect your CIBIL score. However if due to the transfer process, your outstanding amount increases, it could affect your CIBIL score.
To transfer gold loan balance from one bank to another, all you have to do is -
Find a new lender and provide him/her with your current pledge card.
Provide the new lender with all the required documents and reports.
Complete your KYC process
Pay off all the existing interest amounts to the original lender.
Once all your dues with the original lender are paid, your gold loan balance is transferred to the new lender.