Gold Loan Secrets: What Banks Don't Tell You About Your Gold

• RBI rules allow loans up to 75% of gold value, but banks use a 30-day average price, not current market rate, often valuing gold lower.
• Banks conduct purity checks, deducting weight of stones/pearls, and may value 22-carat gold as 18 or 20-carat to minimize their risk.
• Hidden charges like processing fees (up to 1%), stamp duty, and high 'notice charges' for missed payments are often not disclosed upfront.
• Failure to pay can lead to gold auction; if the auction value exceeds the loan, getting the remaining amount back can be a complex process.
• Beware of pre-payment penalties (1-2%) for early repayment and always confirm if interest is simple or compound, as compound interest can significantly increase costs.

Why It Matters: Understand all hidden terms, charges, and risks before taking a gold loan to protect your asset.