The craze for hoarding gold has been on an upward climb for a long time now, and it is not dying anytime soon. The yellow liquid metal is a popular investment vehicle and is equally potent with its use cases. It is used across industries for commercial purposes, too.
Given its skyrocketing prices, people have also been utilizing it as collateral for raising a credit against it. It is feasible for those who have run out of options, and they need a cash influx immediately to meet their demands. It offers several advantages and should be preferred over a personal finance in most cases.
Most credits require a guarantor or an introducer for the applicant to be considered for the funding. Is it the same here, or is there anything different with jewellery loan eligibility? We find out in this article.
About Gold Loans
A jewellery finance is relatively common as a short-term proposition in many parts of the world, especially in India. Many people who cannot secure funding via any other means resort to it. It can help you cover your medical expenses, business needs or suffice with any additional requirements.
So, the borrower goes to the lender and requests him to sanction a jewellery credit. The lender checks gold’s purity and weight and forwards to him up to 75% of the value as a finance. If the borrower has proper documentation, the entire process takes around an hour to complete.
Can You Pledge Any Gold Item?
For lenders to accept any gold item as collateral, it must meet their minimum purity standards. It goes without saying that the higher the purity, the higher the valuation—but most finance providers maintain gold with 18 karats or higher as the base criterion for jewellery loan eligibility.
How to Apply for a Gold Loan?
The jewellery credit process varies from one lender to another. But in most cases, all you have to do is check the eligibility gold finance criteria and ensure that you cover them all. The next step is to submit the articles you want to pledge to the lender. He then performs the tests to determine its market value.
Once the gold’s weight and purity checks are complete, the next step in the jewellery loan process is document verification. If the lender is satisfied with them, he can approve your credit. At Shriram Finance Ltd., your convenience is our priority; for the same reason, we allow users to apply online and only visit us for verification.
Documents Required for a Gold Loan
In usual circumstances, here are the documents that Shriram Finance Ltd. expects from you while seeking a jewellery finance –
- Identity proof – PAN Card/Passport/Driving License/Voter ID
- Address proof – Gas bill with Gas Company’s book/Driving License/Passport
- Additional documents – Recent passport size photographs and any other details (as requested)
Why Apply for a Gold Loan?
Here are the reasons for applying for a jewellery finance –
- Lower interest rate:If you compare jewellery credits with personal finances, the former, being secured, charge a lower rate of interest.
- No income proof requirement:Jewellery mortgages are backed by collateral. The lender does not forward the entire value of the assets, allowing them to be lenient. They do not demand income proof from the borrower, and it lets anyone apply for a mortgage against pledged jewels.
- Minimal processing fee:The jewellery mortgage process is seamless and convenient for all the parties involved. At Shriram Finance Ltd., we charge a minimal processing fee for sanctioning your finance.
- Minimal foreclosure charges:Given the security of a jewellery finance, most lenders charge minimal foreclosure or pre-payment charges while closing the mortgage.
Who is a Loan Guarantor?
When we seek a mortgage, in most cases, banks will demand a guarantor for sanctioning your credit. The term ‘guarantor’ refers to an individual promising to repay a borrower’s debt if he defaults on his finance obligation.
A guarantor is a person with a good credit score and a steady income capable of covering the finance applicant’s inability to repay his mortgage liabilities. In such cases, the lender may seize the guarantor’s assets to indemnify his loss.
A guarantor is different from a co-signer. A co-signer comes into the picture when the borrower does not have sufficient income to qualify for the mortgage. So the co-owner’s name appears on titles which is not the case with a guarantor. The co-signer shares ownership of the asset, whereas the guarantor has no such claim and comes out only when the borrower cannot repay his dues.
Why Do You Need a Guarantor?
A guarantor helps secure first-time loan applicants to secure a finance in a hassle-free manner. Such borrowers often have no credit history because they never availed themselves of a credit or a credit card. The presence of a guarantor eliminates the lenders’ insecurity, and they become more accommodating in sanctioning a finance to the borrower.
Who Can Be a Guarantor?
Only those who meet the below-mentioned criteria can become a guarantor –
- Individuals of age 18 years or above;
- Individuals who are a close family member of the borrower;
- Individuals with a sound mind, capable of understanding the contract;
- Individuals with good credit history and a steady income.
Risks of Being a Guarantor
The guarantor is liable to meet all the borrower’s dues if he is unable to meet them himself. It includes periodic repayments, late fees, and other charges as applicable. If the borrower misses the payment, the lender would initially allow time for him to pay.
But if the issue persists, the lender would inform the guarantor. After a specific period, the lender can demand payments from the guarantor and even possess his properties to suffice with his dues.
Do You Require a Guarantor or Introducer for Availing of a Gold Loan?
Jewellery finances are secured and backed by collateral. The borrower submits the gold articles to the lender while applying for the mortgage. In case he misses timely repayments, the lender can utilize the gold ornaments or coins for clearing the dues.
So there is no need for a guarantor or an introducer while availing of a jewellery finance. Most lenders do not ask for credit history too. All you need to do is to follow the gold loan process and make timely repayments.
Get a gold loan at the highest rates per gram with Shriram Finance
At Shriram Finance, we believe in building long-term relationships with our customers. We offer unmatched convenience for our jewellery credit applicants. Avail of your jewellery mortgage with minimum documentation and get your amount disbursed within a few minutes.