Rajesh stared at the red pouch containing his family's gold necklace. Desperation troubled him. Medical bills for Priya piled up, draining their savings. He'd exhausted all other options - hesitant loans from the family, dipping into their emergency fund. Now, the weight of the gold felt different, not just an heirloom, but a potential solution. Gold loans offered quick cash, a glimmer of hope in their financial storm. But a question lingered - with just the heirloom at his disposal, what is the eligibility to avail of a gold loan? Could he bear to part with the necklace, even temporarily, for Priya's well-being? The decision, though heavy, with Shriram Finance to go for, felt like a bridge towards a brighter future.

Why gold loans are a go to?

Gold loans are a popular way to access quick funds in India. They are secured loans, meaning you pledge gold jewellery as collateral to secure the loan amount. They offer a unique set of advantages that make them a valuable tool for individuals and businesses alike. Here's why gold loans are important:

• Accessibility: Unlike traditional loans that rely on credit history, gold loans are secured by your gold jewellery. This makes them accessible to a wider range of people, including those with no credit history or a poor credit score.
• Quick Disbursement: The gold loan process is typically faster than traditional loans. The lender assesses the value of your gold and, upon approval, disburses the funds quickly, providing much-needed liquidity during emergencies.
• Manageable Repayment: Gold loan soften offer flexible repayment options. You may choose to pay interest only during the loan term and repay the principal later. This can provide some relief on your monthly payments.
• Lower Interest Rates: Compared to unsecured loans like personal loans, gold loans typically come with lower interest rates. This is because the gold serves as collateral, reducing the risk for the lender.
• Safety of Gold: Throughout the loan period, your gold jewellery is stored securely in the lender's vault, often insured against theft or loss. You get your gold back once the loan is fully repaid.
• Multipurpose Use: There are no restrictions on how you can use the funds obtained from a gold loan. They can be used for medical emergencies, educational expenses, business needs, or any other unforeseen financial requirement.

Who Can Apply for a Gold Loan?

Generally, most lenders offering gold loans have similar eligibility criteria. Here's a breakdown of the key factors:

• Age: You need to be between 18 and 70 years old. Some lenders may have a slightly higher upper age limit.
• Occupation: Salaried individuals, self-employed professionals, business owners, entrepreneurs, students, homemakers, and pensioners can all apply for gold loans.
• Citizenship: Most lenders require you to be an Indian citizen.

Gold Requirements for Eligibility

• Type of Gold: Typically, only gold jewellery made from 18 to 24 karat gold is accepted. Some lenders may accept gold coins or bars, but this is less common.
• Purity of Gold: The lender will assess the purity of your gold using a karatmeter. The higher the purity, the higher the loan value you can potentially qualify for.
• Weight of Gold: The weight of your gold jewellery plays a crucial role. The heavier the gold, the higher the loan amount you may be eligible for.

Is hallmarked gold essential for securing a loan?

While hallmarked gold is preferred for gold loans due to easier verification of purity, some lenders may accept non-hallmarked jewellery. The process might involve additional steps to determine authenticity and purity. To expedite the process and potentially get a better loan offer, consider getting your non-hallmarked jewellery hallmarked by a BIS (Bureau of Indian Standards) authorised centre before applying for the gold loan.

Loan Eligibility Calculation:

Lenders have a set Loan-To-Value (LTV) ratio, which is the percentage of the gold's market value that they will lend. For example, if the LTV is 75%, and the market value of your gold ornaments is ₹100,000, you might be eligible for a loan amount of ₹75,000.

Additional Factors Influencing Eligibility:

While the above criteria are the most common, some lenders may consider other factors, such as

• Credit history: Although not a primary factor for gold loans, a good credit history can help you negotiate better loan terms in some cases.
• Repayment capacity: Lenders may assess your income or financial situation to determine your ability to repay the loan.

Documents Required for Applying for a Gold Loan

• KYC documents: Identity proof (Aadhar card, PAN card, Voter ID etc.) and address proof (utility bills, rental agreement etc.)
• Two passport-sized photographs
• Proof of gold ownership (bills or certificates, if any)

Things to Consider Before Applying for a Gold Loan

• Interest Rates: Gold loan interest rates can vary depending on the lender, loan amount, and loan tenure. Shop around for the best rates.
• Repayment Tenure: Choose a repayment tenure that is manageable for your financial situation.
• LTV Ratio: Compare LTV ratios offered by different lenders to maximise the loan amount you can get for your gold.
• Hidden Charges: Be aware of any processing fees, prepayment penalties, or other charges associated with the loan.

Shriram Finance gold loans; always here for you

In need of quick cash? Shriram Finance offers gold loans with benefits like:

• Easy Eligibility: No need for a high credit score, just your gold jewellery (18-24 carats) and basic documents.
• Fast Disbursement: Get the loan amount quickly after approval.
• Lower Interest Rates: Compared to other unsecured loans, gold loans from Shriram Finance come with competitive interest rates.
• Secure Storage: Your gold ornaments are kept safe in insured vaults while you repay the loan.
• Flexible Repayment: Choose a repayment plan that suits your budget, with options for EMI or lump sum payment.

Consider a Shriram Finance gold loan to unlock the value of your gold and address your financial needs.

Conclusion

Understanding the eligibility criteria and the factors lenders consider will help you make informed decisions when applying for a gold loan.

FAQs

1. What are the eligibility criteria for obtaining a gold loan?

You typically need to be between 18 and 70 years old. Some lenders may have a slightly higher upper age limit. Salaried individuals, self-employed professionals, business owners, entrepreneurs, students, homemakers, and pensioners can generally apply.

2. Can I apply for a gold loan if my gold jewellery is not hallmarked?

Some lenders may accept non-hallmarked gold jewellery for loans, but it's less common and the loan amount might be lower. It's recommended to get your non-hallmarked jewellery hallmarked for a smoother gold loan process and potentially better loan terms.

3. How is the loan amount determined based on the value of gold jewellery?

Lenders have a Loan-To-Value (LTV) ratio, which is a percentage of the gold's market value that they will lend. For example, if the LTV is 75% and the market value of your gold ornaments is Rs. 100,000, you might be eligible for a loan amount of Rs. 75,000.

4. What happens if I am unable to repay the gold loan on time?

If you fail to repay the loan on time, the lender will initiate a process to recover their dues. This may involve issuing a notice, contacting you, and ultimately auctioning your pledged gold jewellery to recoup the loan amount and interest.

5. Are there any restrictions on the types of gold jewellery accepted as collateral for a gold loan?

Gold jewellery made from 18 to 24 karat gold is accepted. Some lenders may accept gold coins or bars, but this is less common. Broken jewellery may also be accepted depending on the lender's policy. It's best to check with the specific lender you're considering.

6. Can I get a gold loan if I have a poor credit score?

Yes, unlike traditional loans, gold loans are secured by your gold jewellery. This means a poor credit score is not a primary factor for eligibility. However, a good credit history might help you negotiate better loan terms like a slightly lower interest rate.