Owing to the recent economic slowdown and loss of jobs, several Indian households are struggling to generate sufficient income. Consequently, they often need funds to make ends meet. In such cases, gold is a viable asset to secure funds against easily. Every Indian family possesses some gold, and most times, it sits idle in a locker. Alternatively, individuals can monetize this high-value liquid asset to avail funds and mitigate any financial requirement.
Nevertheless, it is also important for intending borrowers to check the gold loan eligibility before applying.
Gold loan eligibility
Individuals often favour a gold loan over other secured or unsecured credits, primarily due to simple eligibility requirements. For instance, CIBIL score constitutes a determining factor in the eligibility criteria of most loans. However, for gold loans, individuals can still qualify for this advance if they have a poor or no credit score at all.
Nevertheless, in some cases, lenders may check the credit profile and repayment history while deciding LTV and interest rates. Usually, gold loan eligibility includes:
- Applicants must be aged between 21 and 70 years.
- Salaried/self-employed/businessman/professionals/farmers/traders and likes are eligible for a instant gold loan.
Besides, the gold quality also plays a major role in availing of the highest loan available. Generally, lenders accept 18 carats to 24 carats gold articles as collateral. However, if your pledged gold is solid and does not contain other metals, you can secure a substantial loan amount.
Similarly, the LTV also determines the loan amount. RBI increased the LTV cap to 90% on a gold loan. It allows you to avail of most of your current gold value in advance.
However, in that case, intending borrowers also need to complete the documentation process alongside gold loan eligibility.
Gold loan documentation
Like eligibility, gold loan documents required are also minimal, and therefore the loan processing time is short for this advance. Individuals generally need to submit the documents below to qualify for this credit.
- Aadhaar Card
- PAN Card
- Voter ID
- Driving license
- Photo identity card issued by state or central government
- Defence ID card
- Photo credit card
- Aadhaar Card
- Ration Card
- Voter ID
- Bank account details
- Utility bills (water bill/electricity bill/telephone bill not more than 3-months old)
- Letter from an authorised individual
Besides, lenders may also ask for income proof later if the need arises. Apart from simple eligibility and comprehensive documentation, a gold loan also accompanies several other benefits that prospective borrowers need to know.
Other benefits of gold loan
Following are some key benefits of availing of gold loans.
- Competitive interest rates
Since a gold loan is a secured credit option, the lending risk is negligible for lenders. Hence, individuals can service this loan at affordable interest rates. However, the interest rates differ with lenders. Thus, borrowers should compare lenders before settling for one.
- Multiple repayment options
Repaying a gold loan is as hassle-free as you can choose from different repayment options. Reputed financiers like Bajaj Finserv provide three repayment options to choose from. These include –
- Periodic interest payment and principal repayment at tenor’s end.
- Interest repayment initially and principal repayment later during loan tenor.
- Regular EMI payment.
Borrowers can choose as per their repayment capacity.
- Instant loan approval and disbursal
After the documentation and gold appraisal, lenders approve and disburse the sanctioned loan amount almost instantly. Hence, you can obtain this loan to address financial emergencies as well.
- No hidden charges
Selected financial institutions set nominal to zero additional charges for facilities like part-prepayment and foreclosure. However, you need to bear the processing fee, which is a one-time payment.
- Gold security is assured
Since the pledged gold remains with the lender till the loan is repaid, lenders follow stringent security protocols to ensure this gold’s safety. The pledged gold is kept in a security vault with CCTV cameras and motion monitoring devices. Moreover, top financiers also offer complimentary insurance plans for the gold in their possession for the entire loan tenor.
Thus, besides knowing gold loan eligibility and documentation, individuals should also consider other benefits of this credit product before applying.