How to Apply for Gold Loan and its Benefits
A friend who helps in need is a friend indeed. Gold can be your friend in times of financial need. Pledging it is effortless, and obtaining a loan against it is swift. Acquiring a loan using gold can be a rapid, uncomplicated, and smooth procedure, allowing you to secure financing without concerns about loan eligibility.
For centuries, gold has held a special place as a treasured and precious asset, valued for its scarcity and aesthetic appeal. It serves dual purposes – as both an adornment and an investment. Gold is perceived as a secure asset, prompting individuals to make investments in it. What adds to its advantages is the availability of loans backed by gold, commonly referred to as gold loans, which can be readily obtained.
Key Highlights
- Gold loans are secured loans that are sanctioned against the value of the gold assets pledged with the lender.
- The loan is available online and offline. To apply for the loan, however, you will have to meet the eligibility conditions and submit your documents.
- Common eligibility conditions include your age, profession, value of gold assets pledged, ownership of the assets, etc.
- The loan is beneficial given its easy availability, minimal documents, lower interest rates, and multipurpose use.
What is a Gold Loan?
A gold loan is a secured loan that is issued against your gold jewellery or ornaments as collateral. The amount of the loan is determined based on the purity and value of the gold offered as collateral.
Gold loans are offered by several financial institutions. To apply for the loan, you have to fulfil the specified eligibility parameters and submit the relevant documents. Discussed below are the elaborate details of these aspects.
Gold Loan Eligibility
The eligibility criteria to avail gold loan varies across lenders, but generally, the following common parameters are applicable for a gold loan:
Age Requirements
The applicant should fulfil the minimum and maximum age criteria when applying for the loan. The minimum age usually starts at 18 years while the maximum age can go up to 75 years.
Ownership of Gold
The applicant should be the rightful owner of the gold being pledged for the loan. Proof of ownership of the gold offered as collateral, such as purchase receipts or hallmark certificates, would be required.
Gold Purity
Lenders typically accept gold coins, jewellery, or gold ornaments. However, the purity of the gold should meet the minimum standards which is usually 18 to 22 carats. Lower-carat gold might also be accepted by some lenders which might result in a lower loan-to-value ratio.
Eligible Professionals
The loan is usually offered to salaried individuals, self-employed professionals and businessmen.
Documents Required for Gold Loans
Gold loan processing requires specified documents that are used for verification and eligibility qualification purposes. Some of the common documents include the following:
KYC Documents
All financial institutions ask their customers to provide their Know Your Customer (KYC) information to verify their identity and to avoid fraud. You can submit your PAN card or Aadhaar card as a KYC document.
Address Proof
Financial institutions require address proof as a preferred mode of communication or delivery of loan-related documents. You can submit your passport, driver's license, Aadhaar card, utility bills, rent agreement, property documents, etc. as your address proof.
Age Proof
Age proof is needed to ensure that you match the age-related eligibility criteria of the loan. Commonly accepted age proofs include your birth certificate, Voter’s ID Card, Aadhaar Card, passport, etc.
How to Apply for a Gold Loan?
Applying for a gold loan is a simple and relatively straightforward process. Lenders allow you to apply for the gold loan online or offline. For the offline mode, you will have to visit the lender’s branch office and make a physical application. For the online mode, however, you can simply visit the lender’s website and apply for the gold loan in real-time.
Shriram Finance offers an easy application process and a smooth experience with minimum paperwork. Here is the step-by-step guide on how you can apply for a gold loan online through Shriram Finance:
- Check Your Eligibility
To begin with, it is necessary to check the eligibility criteria and ensure that you are eligible to apply for the gold loan. This helps in avoiding possible loan rejections. So, check Shriram Finance Gold Loan’s eligibility parameters to assess your eligibility for the loan.
- Apply Online
Fill up a simple application form online with the basic details such as your name, email ID, date of birth, phone number, address with PIN code, PAN number, and the proposed loan amount.
- Verification
An executive of the financial institution will approach you on the phone number provided to verify your details and explain the entire process of visiting the nearest branch with the relevant documents for completing the remaining procedure of the gold loan.
- Submit Documents and Pledge Gold
Visit the nearest branch of the financial institution and submit the necessary documents required to complete the loan processing. Also, deposit the gold which you intend to pledge for the loan.
- Loan Disbursement
Shriram Finance will verify the purity of the gold and evaluate it. After the processing and evaluation is done, the loan funds will be credited to your bank account.
Benefits of Gold Loan
Gold loans have gained popularity due to their simplicity and numerous benefits. Here are some benefits of gold loans:
- Quick Processing
Gold loans are generally processed faster as they require limited paperwork and can be availed online.
- Affordable Interest Rates
The interest rates on these loans are also lower and affordable allowing easy repayments. For instance, Shriram Finance offers interest rates as low as 11.5%*p.a. on its gold loan.
- No End-Use Restrictions
Gold loans are versatile and the amount can be used for any purpose, be it business or personal needs.
- Flexible Repayment Options
Financial institutions offer flexible repayment options to the borrower including EMIs or bulleted repayment at the end of the tenure. This helps borrowers align the loan with their budget and repay easily.
- Safe Custody of Gold
The gold pledged as collateral remains in the safe custody of the lender. Once you repay the loan, you can get the gold back. Thus, with the loan you don’t have to sell your gold assets to get funds. You can simply mortgage them and get the desired funds for your financial needs.
Did You Know?
Many financial institutions also offer free insurance coverage on the pledged gold. With other institutions, you can get insurance coverage at an added premium. This coverage protects against the loss suffered if the deposited gold gets stolen or is damaged. Your gold is insured from the moment it departs your home until it is safely returned after a successful repayment.
Conclusion
Gold loans are a smart way to raise funds to meet short-term goals or immediate financial requirements. Instead of keeping the gold in your lockers, you can use it to resolve your financial needs. So, know how to apply for the loan and why it is beneficial.
When choosing lenders, Shriram Finance can be an ideal option. It offers gold loans at just 11.5%* p.a. interest with no hidden charges or costs. You can get up to 75%* value of the pledged gold as a loan with repayment tenures going up to 12 months. Apply online with minimal paperwork and get the loan in a jiffy.
FAQs
1. What is the maximum gold loan limit?
The maximum gold loan limit varies across different financial institutions and depends on their lending practices. For instance, Shriram Finance offers gold loans up to 75%* of the mortgaged gold.
2. Can we repay the gold loan monthly?
You can repay the gold loan every month. Gold loans offer flexible repayment options including equated monthly instalments (EMI) as one of the options. Hence, you can convert your loan into EMI and repay it as fixed monthly instalments.
3. What is the validity of a gold loan?
The validity of the gold loan refers to the duration for which the loan is sanctioned and during the period during which the borrower is expected to repay the entire loan along with the interest. The validity of a gold loan depends on the financial institution chosen.
4. What are the charges on gold loans?
The charges on gold loans vary from lender to lender and are stated in the loan agreement. There are minimal processing fees which the institution charges for processing the loan. There may be other charges such as gold valuation charges, renewal charges, etc.
5. What is the duration of the gold loan?
The duration of the gold loan depends on the financial institution and the terms of the loan agreement. Gold loans are relatively short-term and range between 1 year to 3 years.
