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The Gold Loan Disbursal Process Explained

The Gold Loan Disbursal Process Explained

The Gold Loan Disbursal Process Explained


Financial needs can come unannounced. One never knows when they will need a large amount of funds for an emergency. A gold loan is an excellent way of getting funds by keeping gold as collateral. Financial lending institutions provide a loan against various forms of gold, such as ornaments and gold coins. Many people have questions about the loan against jewellery process and loan against jewellery eligibility criteria. Also, people want to know the time taken for loan against jewellery disbursal. To answer these questions, let’s understand what gold loans are and how to get these loans in detail. 

What is a Loan Against Gold Ornaments?

First up, let us understand what a loan against ornaments is? Let us say someone has gold worth INR 10 lakh, and they are in immediate need of funds. They can opt for expensive forms of credit such as personal loans or opt for a loan against gold. In the latter option, they will keep their gold as collateral and get a certain percentage of the value of the gold as a loan. Once they return the loan, they can get their original gold ornaments back. A loan against gold can be taken for varying tenures, ranging from 1 year to 3 years.

Next, we look at the process of taking a loan against jewellery.

Loan against Gold Jewellery process

The loan disbursal process is one of the simplest compared with the process for other forms of loans. Here are the steps involved when taking a loan against ornaments:

  • Application Process:An applicant applies for a loan against gold, specifying the loan’s tenure and required amount. They submit the basic documents such as proof of identity, address proof, and any other documents required. The application process for a loan against ornaments can be done entirely online. However, as part of the process, borrowers need to visit the lender’s facility to submit the gold physically. Borrowers need to pay minimal processing fees for loans against jewellery, starting from 0.1%. This is much lower than the processing fees for personal loans, which can sometimes be over 4%.
  • Verification by the lender:The next stage of the process for getting a loan against gold is verification by the lender. The lender will perform a purity check on the gold and ascertain its market value. After evaluating, the lender will verify the documents submitted.
  • Gold loan disbursal:The loan is processed and approved, and the amount is disbursed (up to 75% of the gold’s value). As compared to other loans, the disbursal of loans against ornaments is the fastest. Those providing the necessary collateral and meeting the eligibility criteria can get an instant pledged jewel loan without any hassles. As the borrower’s income and the credit score do not play a big role in eligibility criteria for a loan against high carat gold, the approval process is much faster. Once approved, the disbursal of the loan against jewellery can happen within a few minutes.
  • Storage of gold and insurance cover:The gold is kept in a secured facility as specified by the government. An additional insurance cover is provided for the gold to deal with any foreseen events such as theft. Insurance cover is provided on loan. If the borrower dies, the insurance takes care of the loan repayment. Subsequently, the gold is handed over to the family of the deceased borrower.
  • Repayment process:After gold loan disbursal, borrowers need to start making monthly interest payments to the lender. The process for a loan against pledged jewels gives borrowers the option to choose between EMI and non-EMI options.

In an EMI option, the monthly payments include both principal and interest payments. At the end of the loan term and after the final payment, borrowers can straightaway collect their gold. In the non-EMI option of the gold loan disbursal process, borrowers pay interest in their monthly repayments. At the end of the loan term, they pay the principal as a lump sum amount.

  • Process for foreclosure:Foreclosure is prepaying the loan before the end of the tenure. The process for foreclosure on loan against pledged jewels is simple. Borrowers must apply for foreclosure and pay the remaining amount.
  • Collection of collateral:Once the loan is repaid, the borrower can collect the gold submitted by them as collateral.
  • Loan renewal option: The gold loan process also provides borrowers an option to renew their loans. At the time of disbursal of loan against ornaments, borrowers commit to loan tenure, say 12 months. However, they may want to extend the term of the loan after, say, 6 months. If borrowers meet the gold loan eligibility criteria for renewal, their tenure can be extended.

One of the loan processes highlighted against gold coins is the eligibility criteria, which does not require any income proof. Next, we look at the eligibility criteria.

Gold loan eligibility criteria

The eligibility criteria for a loan against pledged jewels issimple: Anyone between 18 and 60 years of age (at the time of loan maturity) can get an instant gold loan. They do not have to show any income proof. Also, unlike other loans, the credit score does not determine the borrower’s eligibility for a loan against ornaments. However, it is ideal for maintaining a good credit score

Also, loan against gold jewellery can be availed by a wide range of individuals, including:

  1. - Salaried people
  2. - Self-employed professionals
  3. - Business owners
  4. - Other individuals

Documents required for a loan against jewellery

As part of the loan process, borrowers must submit the following KYC documents. The documents are the same irrespective of whether the applicant is salaried or self-employed.

1. Proof of Identity: It can include any of the following:

- PAN card

- Passport

- Driving License

- Voter's ID card

2. Proof of Residence: It can include any of the following:

- Passport

- Driving License

- Gas bill with gas book

3. Other Requirements:

- Aadhar card (mandatory)

- Latest color photographs (passport size)

In some cases, applicants may require other documents to complete the loan process.

Interest rates

The interest rates on loans against ornaments are much lower than the interest rates on personal loans. At Shriram Finance, borrowers get a customized interest rate depending on the gold submitted and other factors. The interest rate starts from 11.5%. 

Instant gold jewellery loan with Shriram Finance

Shriram Finance is a leader in providing instant loans against pledged jewels with some of the fastest disbursal times in the industry. The loan amount is deposited in the bank accounts of borrowers on the same day of approval of the loan.

The company has been providing loans to individuals and businesses since 1986. As one of the country's most prominent financiers has provided loans to more than 40 lakh borrowers.

Apply for an instant gold loan now.

Get a gold loan at low interest rates