A gold loan is one of the most popular forms of lending in financial sector. Most of the people today prefer this loan because of simple eligibility criteria and hassle-free application process. Many NBFCs and bank offer loans against gold. The benefit of this lending option is that you can get the loan in a matter of few minutes. The fastest disbursal has happened in just 45 minutes. The loan is given the same day of the loan approval. After gold’s valuation and application, the funds are disbursed to your bank account and you can start using those as you like.
Below given are certain features of a loan against gold and why it is still a viable option to secure monetary support.
1- Loan Amount
You can borrow as less as Rs. 10,000 to Rs. 1.5 crore. Many financial institutions can even provide a loan of Rs. 1000 onwards. Depending on the gold asset, purity, and the net weight, the amount of loan will be decided. As per RBI, only 75 percent of the gold’s value can be allowed as fund.
There are times when lower LTVs are also granted. It is not necessary that you have to take the exact amount you are eligible for, as you can borrow a lower amount. The funds can be used for any legit purpose.
Many use the loan for wedding, travel, education, business, farming, medical care, debt consolidation, home repair, important purchase etc. Loan taken for agriculture purpose can be utilized only for the certain activity. You have to provide proof of agricultural activity in this case.
2- Income and Employment
To apply for a gold loan, you do not have to submit proof of income and employment. The loan can be availed by salaried, professional, self employed, housewife, etc. There are no criteria for the borrower regarding minimum monthly income.
3- Age of the Borrower
If you are over 18 years of age, you should be able to get a gold loan. In some cases, financial institutions allow applicants over 21 years of age to avail this loan facility. Check with the organization to see if you qualify for the loan.
4- Documents Needed
Documents needed are minimal. You only have to submit identity and residence proof. Most of the banks and NBFCs would ask for PAN card, Aadhar card, and recent passport-size photographs.
5- Credit Score
Usually for a secured and unsecured loan, your credit history is checked. But for a loan against gold, your credit history is not reviewed until the loan amount is huge. But make sure to repay the loan in time as the repayment behaviour will influence your credit score.
6- Security for Gold
Banks and NBFCs will give complete security to the gold ornaments. Usually the gold is sealed and kept in a safe vault that receives strict security and CCTV camera surveillance. The gold is returned when you repay the complete amount, both interest and principal component.
7- Repayment Options
You get to choose from different repayment options. In bullet repayment, initially for the whole tenure you have to the interest component monthly. At the tenure’s end you can pay the entire principal amount. You can also ask for regular EMI scheme. In case after several reminders and warnings if the loan is not repaid in time then the jewellery shall be auctioned.
The above-given facts about gold loan will help you understand this lending facility better. You can apply for a gold loan online or offline as per convenience. Do remember that a gold loan interest rate will differ from bank to bank, so will the charges and fees. Check these details when you apply for the loan.