5 Important Factors to Consider for Getting the Best Gold Loan Scheme
Financial needs might arise anytime. You might face a medical emergency and need to pay the huge medical bills. You might have to fund your child’s education in a premier institute. For all these needs gold loan can be an ideal choice as it is an instant and hassle-free way to secure fund at times of immediate financial need.
A gold loan happens to be the most feasible option to get instant funds against the mortgage of your gold assets. It is a multipurpose loan which can be used for any type of financial need that you might have, be it personal or commercial.
What exactly is a Gold Loan?
A gold loan is a multipurpose loan which is offered against the security of gold assets. If you have gold ornaments, jewellery, coins, etc., you can pledge them with the lender and get a loan against their value and would be required to pay interest for the loan secured. This is a type of secure loan as the gold pledged acts as a means of security.
Key Highlights
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Benefits of a Gold Loan
A loan against gold is quite popular among borrowers because of its immense benefits.
Easily Available
The gold loan is quite easily available with simple eligibility parameters. You simply have to pledge your gold, and the lender sanctions the funds based on the value of the pledged gold. You can apply online or offline and get the funds quickly. As such, if you have an emergency, a gold loan can give you funds in no time and help you deal with the financial crisis.
Multipurpose
Gold loans are multipurpose loans which can be used for any financial need that you might have, personal or commercial. They can fund a medical emergency, pay for a trip, finance home renovations, etc. They are no-questions-asked loans which come in handy when you have different financial needs to take care of.
Affordable Interest Rates
The loan is secured against the gold that is pledged with the lender. As such, the risk of repayment default lessens. This affects the interest rates, too, which are lower and affordable.
Optimal Financing Solution
The loan amount depends on the value and purity of the gold pledged. Since gold is valuable, you can get a considerable loan to fund your financial needs.
Flexible Repayments
The repayment tenure of a loan against gold is flexible, allowing you to choose one which would give you the most affordable EMI. You can use the gold loan EMI calculator and figure out the right tenure for repaying the loan.
Safety of Gold
The gold pledged with the lender is kept with utmost security till it is in the lender’s custody. As such, you don’t have to worry about your gold being damaged or stolen. It is returned when you pay off the loan amount with interest.
Did You Know?
The gold which is pledged remains in the lender's custody till the date you repay the loan. If you fail to repay, the lender can sell off the pledged gold and use the proceeds to realise the outstanding debt. So, if you want your gold back, pay off the loan within the repayment tenure.
How to Choose the Best Loan Against Gold?
There are different gold loan options available in the market. You must find the best deal to get the financing without burning your pockets. So, here are some parameters for choosing the best loan against the gold option –
Optimal Loan Amount
As mentioned earlier, the loan amount depends on the value of the gold that you pledge. However, different lenders have different lending policies. They offer loans up to a specified value of the pledged gold, and this is called the Loan to Value ratio.
For instance, if the lender offers loans for up to 60% of the value of the pledged gold and you have pledged gold worth ₹50 lakhs, you will get up to ₹30 lakhs as a loan.
So, when choosing the gold loan, look for a lender that offers a higher Loan to Value (LTV) to get a higher loan limit.
Shriram Finance offers loans for up to 75%* of the pledged gold, one of the industry's highest LTVs.
Pocket-Friendly Interest Rate
The loan interest rate is another factor which is important to consider because it affects the added expense of the loan. Naturally, the lower the interest rate, the better the gold loan and vice-versa.
Shriram Finance offers loans against gold at a competitive interest rate, which starts from 11.4%* p.a. Thus, you can get pocket-friendly interest rates if you choose Shriram Finance.
Flexible Repayment Tenure
The repayment tenure offered is another factor because it directly impacts the loan EMI. If the tenure is shorter, you must pay a higher EMI and vice-versa.
So, look for a lender that offers a wide range of repayment tenures to choose from so that you can customise the loan per your needs.
Safe Custody
Understand how the lender intends to keep your gold in its custody. The storage should be secured, and it is better if the gold is insured right from when you pledge it until when it is returned after the loan is closed.
Easy Application
Check the application process for the gold loan. A simple process with limited documentation and can be done online is better as it reduces inconveniences.
Shriram Finance Gold Loans are available online. You can apply for the loan through the website, and our executive will connect with you to take the process forward.
Quick Sanctions
Assess the turnaround time for the loan to get sanctioned. Sanction time by when the funds are transferred to your bank account so that you can use them.
Lenders with quicker sanction times are better as you can get the funds at the earliest and meet your financial needs without any difficulties.
Loan Charges
Lastly, check the charges associated with the loan, like processing fee, foreclosure fee, etc. The processing fee applies across all gold loans, so look for an offer with lower fees. Similarly, look for loan options where the other associated charges are minimal so that your added expenses are reduced.
For instance, Shriram Finance offers loans against gold with low processing fees and no foreclosure charges, making it a favourable lender.
What Makes Shriram Finance Gold Loans one of the Best?
Besides some of the features mentioned earlier, Shriram Finance Gold Loans are good financial solutions with various benefits for lenders. Have a look at these benefits –
- Minimal documentation is needed when applying for a loan.
- Shriram Finance offers a digital application journey wherein your application is processed in real time.
- The gold that you pledge is kept safe and secured.
- You can choose from a tenure of 1 month to 12 months.
- Get quick disbursals since minimal documentation is needed, and the application process is also online.
The Bottom Line
A loan against gold can take care of your short-term and long-term financial needs. You don’t have to sell your gold to get funds. Simply pledge it and get a loan against its value. The loan is quick, convenient and multipurpose to help you finance your obligations hassle-free.
When applying for a gold loan, shop around. Assess the available loan offers on the abovementioned parameters and choose the best option. Get a loan that offers optimal funds, is cost-effective, and is sanctioned at the earliest with minimum protocols. Shriram Finance Gold Loans are one of the best loan options available in the market, with the highest loan value against the pledged gold. Choose the loan and say goodbye to financial stress.
FAQs
1. How do loans against gold schemes work in India?
Under a loan against the gold scheme, you have to pledge your gold coins, jewellery or ornaments, and the lender offers a loan against the value of the pledged gold. The loan amount depends on the pledged gold's value and purity. The funds can be used for any financial need that you might have. You can choose a suitable repayment tenure and pay off the loan affordably.
2. Are there specific eligibility criteria for obtaining a gold loan from Shriram Finance?
You should be between 18 to 75 years old to apply for a Shriram Finance Gold Loan. Moreover, you can get the loan if you are a salaried employee, self-employed individual, or any other individual with a steady income source.
3. What documents do I need to provide when applying for a loan against gold?
The requirement of documents depends on the lender from whom you seek the loan. For instance, Shriram Finance requires your identity proof, age proof, address proof, occupation proof and KYC documents to sanction the loan.
4. What is the maximum loan amount I can get against my gold jewellery?
The maximum loan amount depends on the current market value of the gold you pledge and the gold’s purity. The lenders evaluate the gold, and then the loan is offered up to a specified percentage of the evaluated gold. For instance, Shriram Finance offers gold loans for up to 75% value of the pledged gold.
5. What happens to my gold jewellery when I take a loan against it?
The gold jewellery is pledged to the lender. You will have to hand over the jewellery to the lender, which is then kept in the lender’s safe custody over the repayment tenure. Once you repay the loan, you can take possession of the jewellery.
6. Can I choose the loan tenure that suits me when applying for a gold loan?
You can choose a loan tenure that suits you when applying for the gold loan. However, the tenure should fall within the minimum and maximum tenure allowed by the lender. For instance, Shriram Finance offers a tenure of 1 to 12 months for the gold loan. You can choose a tenure between this range when applying for the loan.
