A comprehensive guide to gold loans in India
Humans have traded gold for money for many years. Gold is crucial not only as a lucky asset but also as a source of monetary stability. Gold loans are secured loans in which you offer your gold possessions as collateral to get money for emergencies and requirements. Gold loans are more reasonable than credit cards or personal loans if you need short-term financing. But full knowledge is necessary before consenting to a financial arrangement.
You can get loans from lenders by pledging gold, often at low-interest rates. The weight of the gold you promise determines the loan amount. And the current gold loan interest rate determines the interest amount you need to pay. The value of the gold jewellery or coins that you are pledging will likewise be high if the market price of gold is high. Lenders will charge you a reduced interest rate because there is no risk involved. Lenders can quickly get their money back by selling or auctioning off the gold jewellery if they are unable to pay the EMIs.
Loans secured by gold are granted to borrowers in exchange for gold-related items. The loan amount is typically offered as a portion of the gold’s value. It’s crucial to comprehend the rate of gold in the market, loan amount per gram of gold, the worth of the gold that’s being pledged, and other eligibility criteria. These factors have an impact on the total credit amount that may be obtained. Borrowers must then repay the loan with the gold loan interest during the loan’s tenure in instalments to receive their gold objects back. The repayment schedule can be monthly or may follow other predetermined repayment schedules, depending on the loan terms.
How does a gold loan work?
It’s simple to understand how gold loans operate. To acquire a gold loan, the borrower must provide 22-karat gold jewellery to the lender. One may receive a loan amount of up to 75% of the value of the gold items pledged.
An evaluator will evaluate the gold and determine its quality and current market value. You can begin the documentation procedure once you’ve agreed to the loan amount and fees.
The money will be transferred to your bank account, and the lender will hold the gold once your loan has been accepted. During the repayment process, one must repay the loan balance plus the gold loan interest charged by the lender.
How to apply for this credit line?
Applicants for gold loans must first submit an application to a lender. A written application must be filled out for a conventional gold loan and delivered to the relevant branch of the gold lending company. This application can be submitted via the lender’s website for an online instant gold loan.
- Proof of identity- PAN card, Aadhar card, passport, driving license, voter’s ID.
- Proof of address- Telephone bill, water bill, electricity bill, rent agreement.
Eligibility for a gold loan:
- Anyone between 21 and 70 of age may apply for a gold loan using gold jewellery as security.
- All types of people are qualified to apply for gold loans, including traders, farmers, professionals, and business people.
- Possess the documents proving your identity and address. For an agricultural loan, a land ownership certificate or other forms of documentary verification is required.
- There is no need to have a good credit score to get a decreased interest rate on gold loans.