Gold is a great investment option. Most investors hold their money in gold rather than currency. The reason is that it stands steady during domestic and international inflation. Also, people buy gold to ensure financial safety in the future. For instance, borrowers can use gold to secure loans and meet urgent financial requirements.
What is a loan against gold?
A gold loan or a loan against gold is a secured type of loan offered by banks and non-banking financial companies in India. It allows borrowers to secure funds against their gold reserve. Borrowers can get up to Rs. 30,00,000/- as a loan, but the loan amount depends on the value of the gold. A Loan against gold comes with affordable interest rates and flexible loan tenure.
The best part about a gold loan is that there are no usage restrictions; which means that there is no restriction on how one can use the sanctioned loan amount approved. Borrowers can use it to pay for a medical emergency, education, wedding, travel, home renovation, debt consolidation, etc.
Features and benefits of a gold loan
A gold loan comes with a host of benefits. For instance, if the borrowers have a higher income and healthy credit score, they can negotiate to the lowest interest rate available in the market. Here are some of the advantages of applying for a gold loan:
- Applying for a gold loan is easy and convenient. Customers simply need to submit the gold along with the required documents. The lender will evaluate the gold jewelry and decide the loan amount accordingly.
- The approval and disbursal processes are quick. Borrowers can get the sanctioned loan amount within hours of application.
- Borrowers can even secure a gold loan with a lower credit score.
- Given the high value of gold in the market, borrowers can secure a loan amount based on their needs and preferences.
- It serves multiple purposes; the loan amount can be used for any purpose.
- The loan tenure is flexible, ranging between six months and thirty-six months.
What are the requirements to get a loan against gold?
The best part about a gold loan is that anyone with legal possession of gold jewelry, bars, and coins can apply for a loan. While submitting the application, there is no need to produce any income-proof documents like salary slips or bank statements.
While the gold loan eligibility varies across lenders in India, here are some of the requirements that are common across all platforms:
- The applicant must be an Indian citizen currently residing in one of the cities of India.
- The applicant must be at least 18 years old at the loan application or 65 years old at the end of the loan amount.
- Banks and non-banking financial companies offer gold loans to salaried employees of public and private organizations, businessmen, and self-employed professionals.
- Some lenders require a co-applicant if the applicant’s age is above 65 years old during the loan maturity.
To get a loan against gold, the applicant can deposit gold in any form, including jewellery, coins, and ornaments. It is worth noting that the minimum purity of the deposited gold must be 18 karats and up to 24 karats. The approved loan amount is determined based on the weight and current market value of the gold items.
Documents required to apply for a gold loan
Unlike other loans in the market, there is no need for heavy documentation along with the application. The documents required to apply for a gold loan are as follows:
- Age proof: Aadhaar Card, Driving license, Ration Card, Voters ID Card, or passport.
- Identification proof: Passport, Aadhaar Card, PAN Card, Voters ID Card, Ration Card, Driving License, Photo Credit Card, or any state government-issued photo identity card.
- Address proof: Aadhaar Card, Ration Card, Passport, Bank Account Statement, Voter ID Card, Any Utility Bill, or letter from any authorized person.
The applicant needs to present income proof later with necessary gold loan documents if the need arises. It is imperative to prepare the above-said documents and meet the eligibility requirements to facilitate ease of approval.