How to Apply for a Gold Loan & Know Its Benefits?

Apply for a Gold Loan
Apply for a Gold Loan

 

Getting a gold loan at the right time, you can reap better benefits without any push or pull from the approval of Buddy Loan, one of the best loan aggregators. However, loan aggregators help you with the best repayment options for a good 5 years. Explore Buddy Loan in order to reap more benefit for a gold loan.

Gold Loan and its true meaning!

Gold loan is a loan given by a bank or institution to an individual who pledges their gold jewellery for money. The gold should be within a range between 18 to 24 carats. The loan amount is a certain percentage of the current gold price, as well as the quality of the gold. This will vary from bank to bank and is typically up to 80 per cent.

The bank will also require certain documents, after which the gold loan will be approved and sanctioned. To make the process easier and clear, availing gold loan through a loan aggregator, Buddy Loan, can help fit your profile to the organisation and disburse loan with very few necessary documents online. 

Read more: Gold Loans During Lock-down – Easy documents!  

Documents Required for Gold Loan

Different banks ask for a different set of documents. Some of the common documents required include Passport size photograph, PAN, Voter’s ID, Aadhaar card, passport, driver’s licence, electricity bill, income proof, identity proof and address proof, etc.

Key Features of Gold Loan

Taking a gold loan from a bank or a financial has some features which are more advantageous than a loan. These features include

Quick Disbursal
Minimum documentation required and faster processing time because the loan is secured by your gold.

No Restriction on Use of Loan
The loan can be used in any manner or for any purpose. As the loan is not for a specified purpose, the loan is not monitored. This gives you the flexibility to meet any immediate expenses

Secured Loan
Other than the pledged gold jewellery there is no need to provide any other collateral or guarantor required

Lower Interest Rates
As this is a secured loan, the interest rate is comparatively lower than a personal loan and other types of loans, the interest rates begin at 11.99% p.a.

Easy Liquidity
Gold jewellery is generally an idle asset lying at home or in the bank locker. Gold loans provide instant liquidity when an emergency arises or when an undeniable expense is anticipated.

Foreclosure of Gold Loan

The gold loan is considered a short-term loan and has a tenure of 1 to 5 years. However, the Gold loan can foreclose the loan before the tenure lapses. While some banks do not charge a foreclosure penalty, some of the banks will levy a charge of 2% to 4% of the outstanding balance. 

Best Gold/Jewellery Loan Company Online

Final Word

Before you sign on the dotted line, it is advisable to check and compare the interest rate, processing fee, late payment penalties, pre-payment charges, and other hidden costs so that you are not taken by surprise when these payments are to be made.

While taking a loan, one should be sure that the loan can be easily returned. Defaulting on a loan will adversely affect your credit rating, and you will find it difficult to get another loan. 

The Minimum Salary Required to Get a Gold Loan

Gold loan eligibility is open to anyone who has the gold jewellery to pledge in exchange for a loan. Hence there is no minimum salary required to be eligible for a gold loan. Unlike personal loans in India or any other instant loan, the gold loan is open to homemakers, farmers, salaried people as long as they are pledging gold with a value.

You also do not need a CIBIL score to be able to apply for a gold loan. However, your repayment of a gold loan will affect your CIBIL score, so you had better stick to the schedule.

However, loan aggregators help you with the best repayment options for a good 5 years. Explore Buddy Loan in order to reap more benefit for gold loan. The banks do not require your business or job stability to grant you a loan. You only need to show identification proof and Aadhaar card along with the other KYC documents.

Lending a gold loan and borrowing one has morphed into modern-day lending, and many private and public institutions loan their customers. 

Read more: Gold Loans During Lock-down – Easy documents!  

Gold loan eligibility

Gold loan eligibility is measured by loan per every gram of gold. The other eligibility criteria are:

  • The quality of gold: The ornaments of gold should range between 18 carats to 24 carats
  • You need to be a minimum age of 23 years and a maximum age of 65 years.
  • You can trade in gold coins and gold bars with 18 to 24-carat purity.
  • The loan can be used in place of a travel loan or any other online loan, as it is easy to procure and requires less documentation.
  • Need to be a citizen of India
Reasons to choose a gold loan
  • When you technically have no credit history that is required when applying for the other loans
  • When you want to reduce the expenses, you incur when processing other facilities.
  • When you need to have the loan urgently, processing a gold loan is fast in approval.
  • If you have gold that you are willing to pledge with a financial lender to get the loan, then this is definitely for you.
  • During emergencies.
  • You are looking for a loan tenure of more than 36 months
The loan may not be suitable for you

The credit may not be ideal for you if:

  • If you have alternative ways to get a lower interest loan, then the gold loan is not suitable for you.
  • If you are not willing to part with your gold, then the loan is not for you.

The gold loan is given against the collateral you provide, and so it is easier and faster to get. The interest rate is comparatively lower than other investments stating at 11.99% p.a.

Gold Loan Without a PAN card

A loan against gold or gold loan is a type of secured loan in which an individual, the customer, pledges their gold ornaments as collateral with a gold loan company or organization. In turn, the company gives a loan amount, as per the market value of the gold submitted, to the customer.

Availing a loan through loan aggregators can suffice your financial needs with your gold. Loan aggregators meet the right bill with the borrower’s profile. Buddy Loan offers flexible tenure for repayment.

When compared to other personal loans, the procedure for availing a gold loan is considered as a pretty easy and quick way of fulfilling one’s financial needs. The alternative to mortgage is gold ornaments or jewellery in this case.

The process for availing a gold loan is quite a hassle-free experience when compared to the other types of personal loans. It also requires minimal paperwork. Also, gold loans don’t require minimal documentation and no validation for income or salary of the individual availing the same.

Thus, if someone has gold ornaments, even if they are unemployed or unsalaried, they can avail of a gold loan. The reason for this being that one is pledging gold, a very valuable asset, in return for the loaned amount. 

Read more: Gold Loans During Lock-down – Easy documents!  

Documents required for availing a gold loan

Mannapuram and Muthoot have been carrying on the gold loan business in India for a long time. It is only in recent years that most of the banks have started to participate in this field actively.

Gold loans are one of the simplest and quickest ways to monetize one’s gold and get money accordingly, as it involves minimal paperwork and requires no validation regarding one’s employment status. However, there is a complete assessment done by the financer or bank on the submitted gold. They accept gold measure 19 – 24-carat pure gold.

To verify the identity of the customer, the bank or financer requires one to have any of the following:

  1. E-KYC (e-Know Your Customer)

Verification of the customer’s Aadhar card with UIDAI and fingerprint can be done online.

  • Physical KYC – any of the below-mentioned documents
  • Aadhar card
  • PAN card
  • Valid Driving License
  • Valid Passport
  • Voter’s ID card
  • Job card issued by NREGA

Often, this is the most obvious question we ask ourselves and the financial institution to help us know the documents that need to be submitted. Can one get a gold loan if he/she doesn’t have a PAN card?

NO! One has to obey the government rules to avail a PAN card to avail gold loan. The mandatory requirements for this are an identity proof and address proof. Thus, any government-issued identity and address proof should be used for this. Also, ID cards issued by companies for working professionals will be of additional benefit in availing a gold loan.

Gold Loan and its Interest Rate

Interest is the amount you pay back with the principal amount to the lender after you are advanced with a loan. Borrowers are expected to pay a monthly EMI to include the interest.

Given that the gold loan is advanced against security.

Availing a loan through loan aggregators can suffice your financial needs with gold. Loan aggregators meet the right bill with the borrower’s profile. They help ease your repayment process. Buddy Loan counter gauge this with an innate objective for every person to clear their financial crisis.

Factors affecting the interest on a gold loan:

Relationship with the bank

They usually advance special offers to their existing clients. When a client has another account with the bank, then they are bound to get a lower interest rate on the gold loan.

Loan to value ratios

The higher the amount of credit compared to the value of the gold then, the higher the interest rate. But when the amount borrowed is lower compared to the value of the gold, then the interest rate is more economical.

Loan amount

The higher the loan amount, the lower the interest rate when all factors remain constant. But smaller loans attract a higher interest rate in a Gold loan.

Features of gold loan Interest

Unlike the interest you pay in other personal loans in India, the gold loan interest is lower, starting at 11.99% p.a.

There are no pre-processing fees for this interest are lower. With a gold loan, you can make a part prepayment and reduce your payment period and, consequently, the interest rate payable.

Different Gold loan schemes,

Gold loans are preferable to most people, because of their ease of application and disbursal. You also do not need a CIBIL history to apply for a gold loan. Therefore the loan can be a choice for many in place of standard personal loans in India. These various loans also service interest depending on the risk evolved.

They are as follows:

Non-agricultural gold loans

This is the loan advanced to all the other individuals who are not farmers.

Agricultural gold loans

The interest in a farming gold loan is given for a maximum loan tenure of 36 months and is charged at an interest rate starting at 11.99%p.a. This is the loan given to farmers and agriculturists and is usually categorized under priority lending. Apart from the gold, the farmers have to show proof of farming.

Payment method may affect your interest rate!

Unlike any other personal loan, you have varied methods of paying your gold loan. This, in turn, affects the interest you pay. This is

Bullet payment: They are most popular with short term loans of ^ months and below. They allow for attention to be paid in EMIs and the principal amount at the end of the tenure. However, the loan attracts a lower to value of 65 %, while other loans attract up to 75 %.

The EMI scheme of payment: though it’s not very popular, its increasingly being used by the gold loan applicants. The borrowers are required to pay monthly instalments to the lenders. And hence, in the long run, the burden of payment is eased on the borrower. 

Read more: Gold Loans During Lock-down – Easy documents!  

All You Need to Know About Gold Loan:

Advantages of Availing a Gold Loan:

Instant processing – Gold loans are secured loans and thus includes lenient eligibility criteria and minimal documentation. It does not even require a credit score for loan approvals. And therefore, lenders generally disburse the loan in just a few hours. People who are eligible for an online gold loan can even get the loan amount in just a few minutes.

Low-Interest Rate – As compared to unsecured loan such as personal loan, gold loans, which is a secured loan, charge a lower rate of interest. Also, if you attach another asset as collateral, the gold loan interest rate can be lowered further.

No processing fees – Many banks and NBFCs levy zero processing fees on gold loans. Even if a lender charges processing fees, it is usually 1%.

No Charges for Foreclosure– Some lenders don’t levy any pre-payment charges while some of the banks do charge a pre-payment penalty of 1%.

Income Proof – Lenders generally do not inquire for an income proof in gold loans as the loan is secured against gold. Therefore, anyone can apply for a gold loan whether earning or not.

Credit Score Not Required – Unlike most loans, gold loan approval does not depend on your credit score. In case of other loans, the loan amount is given on the basis of the repayment capacity and credit history of the borrower but in the gold loan, the loan amount is decided on the market value of gold.

Disadvantages of availing a gold loan:

No chance of Defaulting! – In case of gold loan default, lenders have the legal right to freeze your assets and auction it to get the outstanding gold loan amount. Loan/Value Ratio – In a gold loan, you get a certain percentage of the market value of the pledged gold as the loan amount. The loan amount is decided on the basis of the LTV (Loan to Value) ratio. This ratio varies from lender to lender and goes up to a maximum of 80% of the value of the pledged gold. This means that if the market value of your gold is Rs. 5 lakhs, you can get a maximum of Rs. 4 lakhs.