How does Gold Loan work?

POSTED BY Sunil Kumar ON April 14, 2012 10:48 am COMMENTS (5)

Hi All,

How does the gold loan work? What will be the approx. interest one has to pay?

I was told that instead of putting the gold in locker, rather take a gold loan from bank and invest in FD wherein the interest from FD is more than Gold loan interest. Thus both gold would be safe and you would earn money from this.

Your comments on this strategy?

Thanks
Sunil kumar

5 replies on this article “How does Gold Loan work?”

  1. golduno says:

    Gold loan is sanctioned by accepting the gold ornaments of the customer. Loan against gold is a very simple concept. By pledging your gold ornaments, coins, biscuits, bars etc. the lender provides you with liquidity at a predetermined rate of interest. Loans are sanctioned after scrutiny of basic documents and satisfactory evaluation of the gold pledged.

  2. Sunil Kumar says:

    Oh ok. Thanks for clarifying that gold interest rate is more than FD.

    Thanks again

  3. Dear Sunil, where do you plan to deposit your gold for that loan? Whoever had told you for such possible situation has not told you the truth. How can you earn higher return, if you are paying 15-24% as interest on a gold loan & earning at max. 10% (that too taxable) from your bank FDs?

    Thanks

    Ashal

  4. Jeetu says:

    This is strategy which Gold Finance or Bank use to make money.
    They lend money @ higher interest rate and when it comes to deposits they give lesser interest rate…
    Hope it answers your query

  5. Ramesh says:

    Do check out the interest rates over gold loans. I think they are somewhere around 12-15%. So your strategy seems to be a fail.

    Your strategy will only work if you use fake gold. 😉

    Ramesh

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