All you need to know about the Gold Loan overdraft facility

Read to know more on the benefits of a gold loan overdraft facility and the documents needed.
All you need to know about the Gold Loan overdraft facility
2 min read
12 June 2023

An overdraft against gold is a financial service provided by banks and NBFCs that allows you to borrow money by using your gold ornaments as collateral. The amount you can borrow is determined by the value of your gold, and you can withdraw funds as needed, up to the approved limit.

The gold loan interest rate for the overdraft facility is similar to that of a traditional gold loan. With an overdraft against gold, you enjoy the same benefits as a gold loan and can conveniently repay the borrowed amount in instalments.

The repayment tenure for an overdraft against gold is the same as that of a gold loan. Bajaj Finance offers a fixed tenure of 12 months for this facility.

Before opting for an overdraft facility, it is important to assess your repayment capacity and ensure that the instalments payments are affordable. You can use the Gold Loan EMI Calculator to make an informed decision based on factors such as the weight of your gold jewellery, required loan amount, gold loan rate, and a suitable repayment schedule.

Benefits of an overdraft against gold jewellery include

  • High-value financing: You can borrow a substantial amount of up to Rs. 2 crore, which enables you to meet large expenses.
  • Multiple withdrawals: The facility allows you to make multiple withdrawals from the pre-approved loan amount. This means you do not have to bear the entire loan burden at once and can use the funds as needed.
  • Savings on interest: With the multiple withdrawal facility, you save on interest payments as interest is charged only on the amount withdrawn, not the sanctioned value.
  • Option for early closure: Although the overdraft facility has a fixed tenure, you can choose to close the account at any time by making a full payment of the outstanding amount.
  • Suitable for business capital funding: The quick availability of a high-value advance makes the overdraft facility a suitable option for business capital funding and other emergency personal financing needs.
  • Flexible repayment options: You can choose between instalments payments and lump sum payments to repay the borrowed amount.

The gold loan documents required for an overdraft facility are the same as those for an instant gold loan. These include proof of identity (such as PAN card, Aadhaar Card, passport, voter ID card) and proof of address (such as Aadhaar Card, voter ID card, ration card, utility bills, or a letter issued by an authorised person).

Additional documents may be required by your chosen financial institution to verify your eligibility. It is advisable to gather all the necessary documents in advance to ensure a smooth and hassle-free application process for your overdraft against gold.


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