What is the Complete Process of Taking Gold Loan?

Gold loan, also known as a ‘Loan against Gold articles,’ is a suitable option for individuals seeking immediate funds due to sudden emergencies. With the help of a gold loan, you can get the desired loan amount simply by submitting ornaments, coins, or jewellery made out of gold as collateral. The loan amount sanctioned by the lender is decided based on the market value of the gold and their interest rates vary from one bank to another. 

Borrowers often choose gold loans because of affordable interest rates and flexible repayment methods. You can easily get a loan without showcasing your previous credit history, thereby saving on time and effort. 

Complete Process of Taking Gold Loan

The process of applying for a gold loan is easy because of the simple documentation and eligibility criteria it has. Read on to know more.

Eligibility Criteria 

The procedure of checking the eligibility for a gold loan is quite straightforward. You can easily qualify for the loan if you have sufficient assets that can be deposited as security. Here are the eligibility criteria you must fulfil before taking the loan. 

• You should be an Indian citizen with a minimum age of 18 years and maximum age of 70 years. 
• Most banks and non-financial institutions offer gold loans to salaried, professional, businessmen, or self-employed applicants. 
• You should deposit gold in form of jewellery, coins, or ornaments. The gold must be between 18 to 24 karats. Minted coins must be between 24 karats to 50 karats. 

Documents required 

Following are the documents required: 

• You should provide at least two recent passport size photographs 
• As identity proof, you should provide a pan card, passport, driving license, voter’s ID card, or Aadhar card. 
• As address proof, you can submit a driving license, passport, electricity bill, or gas bill. 
• Few banks require you to submit even an income tax statement for the last three years if you apply for a loan amount above Rs. 25 lakhs.

How to apply for the Gold Loan?

Nowadays, applying for a gold loan has become a hassle-free task as you can proceed online through the bank’s website. All you will have to do is fill up the online form and submit it. You will receive a call on the registered mobile number. For the gold valuation procedure, you will have to visit the nearest branch of your preferred bank. As soon as your documents are verified and ornaments are evaluated, you will receive the loan amount in your bank account within a day. If you find difficulty applying online, you can always visit the bank in person. 

Merits of Gold Loan 

Gold loans have amazing benefits that you should know about. Here is a complete list. 

Low-interest rate 

Everyone wishes to have a lower interest rate on their loan. Since a gold loan is a secured loan, most banks offer low-interest rates on such loans. Generally, the interest rates range from 9% to 20% per annum. You can get much lower interest rates if you have a good relationship with the bank. 

High loan amount 

A gold loan helps you in getting a high loan amount against the pledged gold ornaments.  You can get a loan amount of up to 70% to 75% of the market value. Suppose the value of gold is around Rs. 10 lakh; the maximum loan amount you can get is Rs 9 lakh. 

No credit history required 

Often, applications for loans get rejected due to poor credit scores. This is because the gold ornaments act as a security to the bank. If you are looking to get immediate funds with a lenient eligibility procedure. 

Flexible repayment option 

There are several repayment options available. You can repay the loan by paying monthly EMI’s or interests annually and the principal amount at the end of tenure. Lenders do offer an option of Upfront Interest Payments, where borrowers can repay interest at the start and the principal amount at the end. The Bullet payments repayment option allows you to pay the interest and principal at the end of the tenure. 

Gold loan is an incredible option for all borrowers who are seeking low-interest rates and high amounts.  Because of the flexible repayment period and tenure, you do not have to repay the loan immediately. Also, simple eligibility and documentation process is an added advantage.