What is a Gold Loan?
A gold loan is one of the easiest ways to get instant funds to meet your financial requirements. A gold loan is a loan offered by banks and non-banking financial companies to the borrower against gold items or coins as collateral. You can opt for a gold loan for any purpose, such as investing in your business, to cater to wedding expenses or education costs. In India, purchasing gold jewellery, items, and coins are regarded as an investment that will pay off in the future. So, in case of urgent need, you can utilise this asset to meet your financial requirements.
Why should You Choose Gold Loan?
- Availing of a gold loan is easy and hassle-free, unlike other types of loans that require more documentation & time. It will help you get the loan amount quickly to meet your immediate funding needs by availing of a gold loan.
- You can get up to 75% of the market value of your gold items. You can also use a gold loan calculator to know the loan amount you can get against your gold jewellery or items before applying.
- The documentation process of getting a gold loan is kept minimal by many NBFCs, which allows the borrower to avail of the loan without any hassle.
- Usually, gold loan interest rates are cheaper than personal loan interest rates.
- One of the biggest benefits of getting a gold loan is the fast processing time. So, the loan amount is disbursed quickly by the lender.
- If you wish to pay the payment earlier, there will be no pre-payment penalty levied, unlike other types of loans.
- If you choose the right lending company, you may get to pay no valuation charges on gold loans.
What are the Eligibility Criteria to Get a Gold Loan?
As already discussed, the eligibility criteria for getting a gold loan is not stringent, which makes it a popular way of meeting short-term and long-term financial needs. A gold loan has a minimum eligibility criterion that is suitable for people from different walks of life. It is not compulsory that a person has to be employed or fulfil any income criteria to get a gold loan. Gold is the asset kept as collateral by the lending company, so satisfying any income criteria is not mandatory. The valuation of your gold in the market is the primary factor that affects the loan sanction amount.
Here are the two simple eligibility criteria that need to be fulfilled while getting a gold loan:
- The person should be over the age of 18 years.
- The person should own gold.
What is the Documentation Required for Gold Loan?
For the convenience of the customers, some of the best NBFCs in the market allow their customers to avail a gold loan with only KYC documentation. These are some of the documents that must be produced to get a gold loan:
- Identity proof
- Address proof
- Two passport-size photos
Tips for Choosing the Best Gold Loan
A gold loan is a great way to meet your financial needs, but it is important to keep in mind that you are borrowing money against your gold asset. You have to make repayments on time to repay the entire loan amount and get your gold back from the lender. If you fail to make your payment, the lender has the right to confiscate the gold to recover their loss.
Here are some pointers for selecting the best gold loan in the market:
- Compare interest rates on gold loan offered by different lenders to get the best deal.
- Check for any additional charges by lenders for providing a gold loan.
- Make sure to inspect that your gold is secured with the lender.
The abovementioned points will help you make better choices to fulfill your financial requirements.