We discuss the major features of loan against Sovereign Gold Bonds
Sovereign Gold Bond is a great gold investment but you can take a loan against it too
Some people call it “gold loan on gold bonds”
While most features of Loans against Sovereign Gold Bonds are the same as gold loans
Yet, there are some important variations
Depending on the loan provider, you can take a loan against Sovereign Gold Bond in the physical or demat form
There may or may not be a condition of the bond been bought through the bank
Sovereign Gold Bond being in one of bank’s demat accounts may well be a condition
You get 65-70% of the value of the bonds as a loan
This is marginally lower than the 75% of the value of pledged gold for regular gold loans
Minimum loan amount is typically Rs 20,000 and the maximum can be Rs 20-25 lakh
Overdraft facility providing a credit line is available for 2-3 years
You pay interest for the amount of credit line used
For a regular loan, the term can move from 1 year to even 4-5 years
For regular gold loan, the common term will be 1-2 years
Interest rate would be 9.4-9.5% p.a to 12.5% p.a.
Processing charge will be 0.5-0.75% of the loan amount
You have lots of options in EMI including paying interest upfront
And pay principal during the loan term
You can only pay interest during the loan term pay principal amount at the end of the term