What Is A Gold Loan Overdraft Facility?

A gold loan overdraft facility is a flexible credit option that allows you to use your gold as security while giving you access to funds whenever you need them. Instead of receiving a lump sum as with a traditional gold loan, you are given an overdraft limit based on the value and purity of the gold you pledge.

This limit works much like a credit line—you can withdraw money as and when your needs arise, up to the maximum sanctioned amount.

One of the major benefits of a gold loan overdraft is that you only pay interest on the amount you actually use, and only for the number of days you use it. For example, if you have a ₹2 lakh overdraft limit but use only ₹50,000 for a month, interest is charged only on that ₹50,000 for the specific period. This makes it a cost-effective solution for people who have unpredictable or variable cash flow needs, such as business owners or self-employed professionals.

Repayment is also very flexible. You can deposit funds back into your overdraft account at any time reducing your outstanding balance and the interest charged. The facility is usually reviewed and renewed periodically, often annually, based on your repayment track record and the current value of your pledged gold.

Overall, a gold loan overdraft facility offers convenience and control, making it ideal for those who want quick access to funds without the obligation of fixed monthly repayments.