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Gold Loan Balance Transfer

Gold Loan Transfer

Last Updated 13th Jun 2021

Interest rate 9.50% -15.00%
Loan Tenure 3 months - 24 months
Processing Fee Upto 1% of loan amount
Prepayment charges 1%
Lowest EMI per Lakh ₹ 4,493
  • Transferring a gold loan from one lender to another lender is called Gold Loan Balance Transfer.
  • Gold loan transfer from one bank to another can lower the EMI and provide insurance on the yellow metal which is pledged.
  • Documents required for gold loan transfer are application form, identity proof, address proof and previous gold loan pledge card.

Video: Gold Loan Benefits, Eligibility, Documents & Process

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What is a Gold Loan Transfer?

The process to transfer a gold loan from one lender to another is called a gold loan balance transfer. You can transfer the gold loan account from one lender to another if you are not happy with customer service or are getting a lower interest rate from another bank. However, every lender does not offer a gold loan balance transfer facility; before transferring the loan, check if this decision is worth transferring and what benefits a borrower can have. The HDFC Bank offers a gold loan at the lowest interest rate of 9.50% per annum.

What Are the Benefits of Transferring Gold Loan?

The advantages of transferring a gold loan are:-

  • Get higher per gram rate. If a new lender is providing a loan at a higher LTV ratio, the current lender can get a higher loan amount. Most public and private sector banks offer up to 65% of the current value of gold, and NBFC offers up to 70% of the current value of gold used as collateral.
  • Get a lower interest rate as low as 9.50% per annum with a new lender.
  • The lower interest rate means reduced EMI, which helps in saving money.
  • A borrower can avail of better loan features like Nil processing fees, repayment terms, etc.
  • A borrower can get more security for the gold which they have pledged. For example, they can get insurance against theft and other damages during transit.

Eligibility Criteria for Gold Loan Balance Transfer

Every financial institution has different eligibility criteria for gold loan transfer from one bank to another, but the standard criteria are as follows:-

  • A person who is in between 18 years and 75 years can apply for a gold loan balance transfer.
  • A borrower must have paid 6-12 Equated Monthly Installments (EMIs) of the gold loan that he/she owns or 1-5% of the outstanding principal.
  • The yellow metal which is pledged should be in a range of 18K-22K.

Gold Loan Balance Transfer Process

Follow the below-given steps to transfer the gold loan from one lender to another bank:-

  • Check the current rate
  • Calculate how much money you will save on interest
  • Evaluate the cost of processing fees and various charges
  • Select a new lender where you wish to transfer the gold loan
  • Check eligibility criteria of a new lender
  • Foreclose the car loan account with the existing bank
  • Get all the submitted documents from the previous lender
  • Share your existing gold loan pledge card with a new lender
  • Apply for a loan in a new bank
  • Fill the application form and submit the required documents
  • Complete the KYC process
  • Execute a new loan agreement
  • Take disbursement from the new bank by way of cheque/ demand draft in favour of the existing bank and also deposit the same

Gold Loan Transfer Charges

The charges involved to transfer a gold loan to another bank vary for every bank, depending upon the existing lender and a new lender. Some essential charges which are incurred are:

  • Foreclosure charges - Foreclosure charges are also known as pre-closure charges, which are to be paid by a borrower to a lender. A lender incurs the charges to cover the lost interest due to closing the loan account before time. The foreclosure rate for every bank is different and generally starts from nil to even upto 1%.
  • Processing Fees- For the loan processing, banks and NBFCs charge a processing fee that ranges between upto 1% of loan amount.
  • Administration Charges - A non-refundable fee charged by a lender when a person applies for a loan. The administration fee ranges from ₹ 2,500-₹ 6,500.
  • Inspection Charges - The bank will levy fees when they do an evaluation process of collateral that will be pledged.

Documents Required for Gold Loan Transfer

The general set of documents that a lender will ask in case of a gold loan takeover are as follows:-

  • Gold loan application form
  • Identity Proof- Aadhar card, PAN card, Passport, Driving License, Voter ID, Job card issued by NREGA
  • Address Proof- Electricity bills, Gas bills, Water bills (latest), Passport, Driving License, office address- lease/ownership/rent certificate, Job card issued by NREGA
  • KYC documents (signature proof)
  • Passport size photographs

FAQs

Which bank is best for a gold loan?

Gold loan in India is offered by most of the banks and NBFCs. Canara Bank, SBI, Federal Bank are considered acceptable because they offer loan at the lowest interest rate 7.35%, 7.50% and 8.50%, respectively.

Does gold loan affect cibil?

The gold loan can negatively impact your credit score if you have made multiple gold loan queries. However, if you make regular EMI payments and repay the loan on or before the tenure can improve your credit score.

Is Gold Loan Safe?

Yes, a gold loan is safe because the gold jewellery- if you pledge as collateral- is kept in a safe in vault lockers, and few banks also offer insurance on the collateral.

Is a gold loan a term loan?

A term loan is a loan that has a fixed tenure and fixed loan amount. A gold loan is a short term loan whose tenure ranges between 6 months to 36 months. A borrower can decide between a fixed or floating interest rate in the gold loan.


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