What is the tenure of overdraft facility against gold?
Overdraft against gold is a financial service offered by banks and NBFCs, where you can obtain loans by pledging your gold ornaments as collateral. You are granted a credit limit based on the value of your gold, and you can withdraw money as per your requirements up to the limit.
The interest rate charged on the gold loan overdraft facility is more or less equal to that of a traditional gold loan. With an overdraft against gold jewels, you can avail various benefits mirroring gold loan and repay conveniently in instalments.
What is the tenure of a gold overdraft loan?
The repayment tenure for an overdraft against gold is quite similar to a gold loan. Bajaj Finserv offers an overdraft facility with a fixed gold loan tenure of 12 months. This allows you to borrow against your gold while having a clear time frame to repay.
Before opting for an overdraft, it is important to assess your ability to repay. Ensure that the monthly instalments fit your budget. A good way to plan is by using the Gold Loan Calculator . This tool helps you understand how much you can borrow based on the weight and purity of your gold jewellery, the loan amount you need, and the gold loan rate. It also helps you set a suitable repayment schedule so you can manage your payments easily.
Using this calculator can guide you in making an informed decision about your gold loan or overdraft, ensuring that you choose a loan amount and tenure that align with your financial situation. It is always wise to check your repayment capacity to avoid any strain on your finances.
How long can you avail an overdraft against gold?
When you choose an overdraft against gold, you usually get a fixed time to use and repay the money. Most lenders offer an OD against gold for up to 12 months. This means you can use the loan for a full year. You can borrow money whenever you need within this time and repay it as per your comfort.
The gold loan overdraft facility is very flexible. You do not have to take all the money at once. You can use only the amount you need. The good thing is you pay interest only on the amount you use. The gold od interest rate is usually affordable, making it easy to manage.
During the 12-month period, you can withdraw and repay multiple times. This makes a gold overdraft very useful when you have different money needs at different times. At the end of the tenure, you need to clear the full balance.
It is important to remember that the gold loan od interest rate may vary based on how much money you use and how quickly you repay. So, always plan carefully to make the best use of your gold overdraft facility.
Tenure vs flexibility – Why choose gold OD?
While an OD against gold gives flexibility, a regular gold loan is often a better choice for those who want clear and simple repayments. In a gold loan, you get a full amount at once, based on your gold’s value, and you know exactly how much and when to repay. There is no confusion or sudden interest charges like an overdraft against gold.
Here is why a gold loan is better than a gold overdraft:
- Fixed loan amount: You get a clear lump sum at the beginning, unlike a gold loan overdraft where the amount changes.
- Clear repayment plan: Regular interest repayments make it easy to manage, unlike gold overdraft where repayment can be confusing.
- Lower gold loan od interest rate: Many times, the gold loan od interest rate is better than overdraft rates.
- No risk of overuse: In gold overdraft, you might borrow more without realising it. In a gold loan, you stay disciplined.
- Peace of mind: Fixed tenure and fixed amount make it easier to plan and finish repayment peacefully.
Choosing a gold loan gives you full control over your money and repayment!
Renewal Process of Gold Overdraft Facility
Renewing your gold overdraft facility is very easy. When your overdraft tenure ends, you can renew it to continue using the benefits without taking your gold back. Renewal helps you keep your od against gold active for longer, based on your needs. Most lenders offer a simple renewal process for your overdraft against gold, making it easy to continue enjoying a credit line against your gold jewellery.
Here is how the renewal process works:
- Assessment of gold: At the time of renewal, your gold is revalued to check its current market price and purity.
- Fresh agreement: A new agreement is signed for the renewed gold loan overdraft facility.
- Review of account usage: Your lender may check how much you used from your gold overdraft limit before renewal.
- Update of terms: The gold od interest rate and loan terms may be updated based on the new gold value.
- Payment of pending dues: You may need to clear any pending interest before renewal.
- New tenure: Once renewed, your gold loan od interest rate and tenure are reset, and you can continue using the overdraft easily.
Renewal helps you enjoy continuous access to funds without any hassle.
Benefits of overdraft against gold jewellery
Top benefits of availing overdraft against gold jewellery include the following.
1. High-value funding
The overdraft facility against gold jewellery is a high-value financing option allowing you to seek up to Rs. 2 crore as funding. Such a financing quantum makes it possible to meet big-ticket expenses.
2. The facility of multiple withdrawals
The overdraft against gold ornaments allows multiple withdrawals from a pre-sanctioned loan amount. Therefore, you do not need to bear the entire loan burden all at once and can spend the funds as and when necessary.
3. Significant savings on interest payable
A multiple withdrawal facility also comes with significant savings on the repayment liability as interest is charged only on the amount withdrawn and not on the sanctioned value.
4. Eligible for anytime closure
Even though the overdraft facility comes with a set tenure, borrowers can initiate account closure at any time by making a total payment of the liability at one go.
5. A suitable financing option for business capital funding
Given the quick and convenient availability of high-value advance, the overdraft facility suits business capital funding needs at short notice. It is also suitable for any other emergency personal financing need.
6. Multiple repayment options
Borrowers can choose between instalments and lump sum payments to repay the loan amount availed as overdraft against gold.
Documents required for loan against jewellery
The documents required for a gold loan are the same as those for the overdraft facility and include the following.
- Proof of identity includes any photo identity proof issued by an authorised body, including PAN card, Aadhaar Card, passport, voter ID card, etc.
- Proof of address issued by an authorised body or individual like Aadhaar Card, voter ID card, ration card, utility bills, a letter issued by an authorised person, etc.
Your selected financial institution may ask for additional documents over and above the given list to attest your eligibility if needed. Make sure to arrange all documents beforehand for hassle-free paperwork completion of your overdraft against the gold application.
Difference between gold loan overdraft and gold term loan
A gold overdraft and a gold term loan both let you borrow money by using your gold jewellery as security. However, they work in different ways. Here's a simple breakdown of both:
Feature |
Gold Overdraft |
Gold Term Loan |
Type of loan |
Flexible line of credit |
Lump sum loan amount |
How you borrow |
You can borrow money as needed, up to a limit |
You get a fixed amount of money upfront |
Repayment |
Flexible, you can repay and borrow again |
Fixed repayment tenures with set terms |
Loan limit |
Based on the value of your gold jewellery |
Based on the value of your gold jewellery |
Flexibility |
High flexibility, borrow anytime up to the limit |
Less flexible, set amount for a set time |
Gold used as security |
Yes, your gold acts as collateral |
Yes, your gold acts as collateral |
In simple words, a gold overdraft is like having a credit card, where you can borrow money as needed, while a gold loan gives you all the money at once, and you have to pay it back in fixed instalments.
If you are looking for quick funds, both options can help, but the choice depends on how much flexibility you need in repaying the loan.
**Note: It is important to note that Bajaj Finance does not offer a gold overdraft loan as of now.
Frequently asked questions
With a gold loan OD, you get a credit limit against your gold collateral. You can withdraw funds up to this limit whenever needed. Interest is charged only on the amount you use, and repayment is flexible. It's like having a safety net of funds backed by your gold assets, providing financial flexibility.
To repay your gold loan OD, you simply need to make periodic interest payments. These payments can be made monthly or quarterly, depending on your lender's terms. Additionally, you have the flexibility to repay the principal amount at your convenience, ensuring minimal financial strain while managing your loan effectively.
A gold overdraft account lets you borrow money by giving your gold jewellery to the lender. You get a credit limit based on your gold’s value. You can use only the money you need and pay interest only on the amount you use, not the full limit.
Any Indian citizen who owns gold jewellery can apply for a gold overdraft. You must also meet the lender’s age and basic identity rules. It does not matter if you are working, self-employed, or a homemaker — anyone with gold can use this facility.
The interest rate for gold overdraft loans is usually low and affordable. It depends on the lender’s policies. The best part is you only pay interest on the amount you borrow, not on the full credit limit you get against your gold.
In a gold loan overdraft account, interest is charged only on the money you actually use, not on the full loan amount. For example, if your limit is high but you borrow a small part, you only pay interest on that small, borrowed amount.
Yes, gold overdraft loans usually come with a fixed tenure. You can repay and reuse the limit during this time. After the tenure ends, you need to settle the full amount.
