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A gold loan can be acquired from a bank or financial institutions by pledging gold. You can either pledge your gold jewellery or gold coins to get a gold loan approved. These loans are short-term loans and have always proved to be the most appropriate and preferred loan amongst the others.
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Gold loans have an added advantage over other loans in terms of documentation as well as processing. It is a very critical decision to exit from a gold loan. This decision has to be made accurately based on the reasoning related to its ROI (Calculative reasoning) and reducing debt burden (psychological reasoning). Creditseva is here to help you stay creditworthy and also close your gold loan without any hassle. You just need to sign up, fill in your basic details and receive detailed as well as holistic insights of your credit-related data and thus maintain, improve your credit score in an easy and simple manner.
Procedure for Closing a Gold Loan
Closing a gold loan would be surely a moment of joy for the loan holder because a heavy duty responsibility of paying interest comes to an end. It starts with requesting the bank for a loan closure by sending them a letter. This is later on followed by receiving a letter and a No Due Certificate from the bank in return (a letter which states that the account has been closed).
Loan Closure After Loan Tenure Completion
Nothing much needs to be done if you are closing your gold loan at the end of tenure. You have to just make the payment for the last instalment and the loan is closed. After you have made the payment for the last EMI, you should be writing a loan closure request letter to your loan provider saying that your gold loan tenure has ended.
Loan Closure by Prepayment
Whenever you are willing to prepay your gold loan, you need to check the amount left over with the bank. The bank needs the approximate date and the borrower needs to request the bank to calculate the dues that are outstanding till that date.
Steps to Close a Gold Loan
There are certain precautions to be taken while closing a gold loan. They are as follows
- You need to write a letter to the bank mentioning that you are willing to close the gold loan. You also need to ask how much balance amount is yet to be paid after calculating the interest.
- Usually, a foreclosure penalty is charged. Some Banks might levy a foreclosure penalty. Technically, you are entitled to a rebate on account of interest for the period by which you have preponed the closure of your account.
- You need to get an SOA from the bank. The SOA should mention that there are no dues from your side.
Things to be Done While Closing a Gold Loan
Few important things have to be taken care of while you are closing your gold loan. Some of the most crucial points are listed below
- Primarily, the entire outstanding amount should be paid off
- You need to visit the bank and ask the bank authorities to close the account. A written application may also be required.
- You need to ask the bank to provide you with a final account statement and also a letter which states that your account has been closed and there are no more dues.
Important points to be kept in mind while closing a Gold Loan
These points are to be carefully analyzed while you are in the process of closing your gold loan. If you fail to do so, you will be at a loss while the loan closure process.
- It can be closed at any point of time. You don’t have to follow a time period to close a gold loan. A gold loan can be closed at any time.
- In case of a gold loan, EMI is not compulsory.
- It is not mandatory to pay an amount as interest, every month.
- A gold loan can be closed by paying the principal amount with a single instalment and interest.
- The interest on gold loan should be paid regularly, if the borrower fails to do so, the loan will be foreclosed.
Gold Loan FAQs:
1. Can a gold loan be closed before the completion of its tenure?
Yes, a gold loan can be closed before the completion of its tenure. You have the option of foreclosing your account where you can pay back the loan amount before its tenor and release your gold from the branch.
2. What are the closure charges for closing a gold loan?
Usually, the closure charges vary based on the loan amount. If a gold loan is closed 3 months before the end of its tenure, the certain amount of nominal charges is applicable depending on specific banks.
3. How much time does it take to close a Gold loan?
The time taken to close a gold loan depends on the size and the complicatedness of the loan. Usually, the closure time varies from 3-4 days to few weeks.
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