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Top Ways on How You Must Apply for a Gold Loan

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Business Loan in Bhopal

Gold is the most favoured and bought metals in India. As per the WGC (World Gold Council) report, in the quarter of September 2021, the demand for gold increased by 47 per cent on an annual basis than its corresponding quarter in the year 2020. While the demand for gold in India has been around 123 tons pre pandemic in the quarter of September 2019, it decreased to 94.6 tons in 2020. However, in the past year, the gold demand has risen and has recorded an increase of 139.1 ton.

There are numerous reasons why individuals prefer to invest in gold like ornamental uses, religious and traditional offerings, as this serves as a hedge against market volatility and inflation. Read on to know all about gold loans.

What’s a gold loan?

A loan against gold is a secured loan that is provided after you pledge gold as security. In case you own gold bullion, jewelry, or ornament, you can mortgage this with the lender and get a loan against the overall value of mortgaged gold. Basically, your assets or security in the form of gold comes across as security or collateral for availing a loan. Also, note that as gold loan is a secured loan option, the interest rate on gold loan is lower than unsecured loan. For instance, Muthoot Finance gold loan offers Muthoot gold loan interest rate from 9 per cent per annum onwards.

What are the features and benefits of opting for a gold loan?

Mentioned here are some of the crucial features of availing a loan – 

  • Loan is a multipurpose option, meaning, you can make use of the proceeds for meeting any of your financial requirements.
  • You can place an application for a loan through the online mode and get the funds as early as possible.
  • Lender assesses the gold value that is provided as a mortgage. Thus, the loan proceeds are decided depending on this valuation.
  • Gold loan rate of interest are lower as your loan is backed up by gold, which the lender can sell to realise outstanding loan proceeds in the scenario of any default.
  • Many lenders even permit a free insurance on gold held as mortgage so that your securities and assets are secured.
  • The lender holds gold in thoroughly safe custody until the loan is completely repaid. Once the credit account is closed, gold mortgaged when providing the loan proceeds are returned to you.

How can you get a gold loan?

In the case you hold gold assets, and you are looking for funds for commercial or personal requirements, you can consider mortgaging such assets to get a loan against them. Read on to know how you must go around it –

Check out your eligibility parameters – 

The initial thing you must do for availing a gold loan is checking out whether you mitigate the eligibility parameters set by the lender. Distinct lenders come with distinct eligibility criterions, but the basic needs stay the same. These generally involve the following –

Age – You must have the age of at least 18 years and more. Many of the lenders permit loans just if the borrowers are near 23 years.

Income – You must have a steady and regular source of monthly income. The minimal income limit differs across lenders.

Credit profile and score – An excellent credit profile and score is required for availing a gold loan. The score ranges anywhere between 750 and 900. So, ensure to always review the gold loan eligibility criterions set by the preferred lender before availing a gold loan.

Also Check: Muthoot Gold Loan Interest Rate

Ensure to keep the documents handy – 

A specific set of documents is required for establishing and authenticating your identity, age, and income. Usually, lenders ask for the documents listed below to process the gold loan –

  • Identity proof. These documents include PAN card, voter’s ID card, passport, PAN card, etc.
  • Age proof. These documents include Aadhaar card, passport, birth certificate, PAN card, etc.
  • Address proof. These documents include rent agreement, utility bills, Aadhaar card, property documents, etc.
  • Past three to six months’ bank statement
  • Income proof like form 16, salary slip, IT returns, audited financial statements, etc.

Ensure to keep all such documents handy with you so that you simply may provide them with a loan application for quick loan processing.

Compare the lenders and select the best one – 

There are various lenders, both non-banking financial companies and banks that provide gold loans. You must, thus, ensure to check out the available lenders in the market and compare their rate of interest. Also, ensure you compare the loan proceeds that the lender willingly may sanction. Select the lender offering the lowest rate of interest and processing charges so that your gold loan is at an affordable mark. Additionally, look out for the lender that provides funds you need.

Ensure to get gold valued by lender – 

Post you have compared among lenders and shortlisted the preferred one, you would require knowing the value of the gold to find out the highest loan proceeds you may be eligible for. So, specify the gold assets quantum to know their value. Note that the valuation would be based on the gold’s purity that you pledge as well as its weight. In the case of gold ornament, jewelry, the weight of the metal is just considered, and the weight of the precious stones are not factored in. So, better check out for the purity as better purity means high weight, which means higher loan proceeds.

Finish the application procedure – 

You can fill out the gold loan through the offline or online medium. In either case, you must fill out the application form and there you must mention all the required details like financial and personal info. Fill out the form properly, sign it and next submit it to the lender with documents for hassle-free processing. If approved, your loan proceeds would be provided to your bank account soon. Once the proceeds are disbursed, you can use the same for any purpose like a personal loan.

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