Travelling to new places is enjoyable and enlightening. However, international and domestic travel can be expensive. Sometimes, people do not have enough cash in hand. In such cases, a gold loan can be a good option. Many banks, Non-banking Financial Companies (NBFCs), and financial institutions typically offer loans against gold, allowing people to use their gold jewellery or coins to get quick cash.
So, if you need funds for travel and have gold at home, this step-by-step gold loan guide for travel will help you understand the steps involved in securing a gold loan for your travel plans
What is a Gold Loan?
A gold loan lets you get cash by keeping your gold jewellery with a loan provider. You get an amount based on the gold's purity and weight. You pay this back plus interest generally over 3 months to 2 years. Once fully repaid, you will get your gold items back. Easy gold loans for travel usually charge less interest than personal loans since the gold serves as collateral for the loan provider.
Check Your Eligibility for a Gold Loan
To get a gold loan for urgent travel, you typically need to:
- Be 18 years or older
- Own gold jewellery or coins that are usually 18 karats or higher in purity
- Pledge your own gold rather than borrowed gold
- Show the ability to repay as financial institutions generally verify you can pay the money back
So, if you are an adult who owns high-purity gold items, you can typically use them to secure a loan. While loan providers don't have fixed income requirements, they usually want to ensure you can pay the loan amount back with interest as per the repayment terms.
Choose a Lender
You can get a gold loan for urgent travel from banks, non-banking finance companies, etc. So, compare options from different banks or NBFCs before deciding. Check the:
- Interest rate: Rates generally start from 9% per annum across varied loan providers.
- Loan amount: This is usually based on the gold's purity and value. Lenders typically offer up to 75% of the gold's market price.
- Fees: Some charge processing fees and other types of fees, while others don't.
- Repayment structure: Many lenders typically provide flexible options. See if you must pay Equated Monthly Instalments (EMIs) monthly or make a lump sum payment at the end.
By comparing terms across various financial institutions, you can generally understand the differences in loan amounts, interest costs, fees, and repayment options. This helps you pick a suitable gold loan provider that fits your needs.
Gather Required Documents
Easy gold loans for travel require very few documents compared to other loans. However, you typically need to provide:
- Identity proof like Aadhaar card, PAN card, passport or voter ID
- Address proof such as utility bills, Aadhaar, rental agreement
- Your passport-size photographs
- Gold ownership proof in some cases
Loan providers generally do not ask for income statements or your credit score when giving a gold loan. This makes getting a gold loan much easier compared to personal or business loans.
Visit the Lender and Get Your Gold Evaluated
After selecting a gold loan provider, visit the financial institution's branch to have your gold jewellery or ornaments valued. At this stage, the gold is usually checked for its weight and purity level.
Based on the gold's weight and purity, the loan providers will tell you how much of a loan you can get against the gold. This amount is typically up to 75% of the current gold market rate. If you agree with the loan terms related to interest, fees, repayment, etc., you can proceed to complete the loan process.
Getting your gold properly valued is an important step, as it decides the loan amount you are eligible for. With the right evaluation, you can transparently get the maximum possible loan against your gold.
Loan Approval and Agreement Signing
When you decide to take a loan, you usually sign a loan agreement. This lays out all the important details in simple language. It typically mentions the amount you are borrowing, the interest rate charged, and when you need to make repayments. The document also states what gold or other asset you are putting up as security for the loan. Before signing, it is wise to read the terms properly so you understand everything.
This can help avoid misunderstandings later. Going through the agreement carefully is a good way to be clear on your responsibilities as an applicant.
Loan Disbursement
Once you sign the loan contract, the bank or NBFC will typically release the loan amount as per their policies. In most cases, the fund transfer to your bank account happens fast, sometimes within hours. Rather than cash, direct bank transfers are the usual mode used nowadays. This method is generally more convenient and safer, too.
While timings may vary, most loan providers aim to disburse quickly after the paperwork is done, as keeping customers waiting is not ideal.
Use the Money for Your Travel Plans
Having the loan money in hand allows you to cover costs for the trip you have been planning. Now, you can go ahead with purchases like flight tickets, hotel reservations, or other travel needs without worrying about funds. Typically, people use loans for expensive experiences like vacations, which they can't pay for upfront.
The extra financing helps ease financial constraints so you can focus on creating memories rather than budget stress.
Repay the Loan on Time
When you take a loan against gold, there are typically different ways to repay. You can go for regular monthly payments of a fixed amount. Another option is bullet repayment - settling the full loan plus interest in one go at the end of the tenure. Alternatively, you can pay only interest every month and the principal at the end. Regardless of the method, it is wise to pay on time based on your contract.
This helps avoid late fees or other penalties. Timely repayment also means the loan provider returns your gold collateral without trouble once you clear dues. Staying on top of payment schedules is key to managing loans well and maintaining good credit.
Collect Your Gold After Loan Repayment
After you have paid your final loan instalment, the last important step is to collect your gold. When you go to pick up your collateral, be sure to inspect it carefully at the branch. Check that the gold jewellery or bars are in the original shape without any damage. Well-known loan providers with good practices will typically store pledged gold safely until repayment is made.
Conclusion
A gold loan is usually a quick and easy way to arrange funds for travel. The process is typically simple, with less paperwork and fast approval. However, it is always good to compare banks or NBFCs, check interest rates, and understand the repayment terms before taking a loan. Repaying the loan on time ensures you get your gold back without any trouble.
