Indian residents have huge respect for gold as it is highly linked to social, cultural, economic, and historical value. If we go through the numbers, India is the second-largest consumer of gold. The World Gold Council’s managing director said that Indians have stored around 25,000 tons of gold with them. There are a lot of individuals who consider gold as a great investment alternative for building up their savings. They prefer gold, as they can even use it during harsh times to get immediate help. Initially, a few business firms provided loans on gold in the country. However, this number has gone up recently. The COVID-19 pandemic has led to a rise in demand for gold credits.
In the below-written article, we’ll discuss the gold lending rate and all the documents required for taking up the loan.
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Documents needed for taking a gold loan:
Below mentioned are some of the most important documents you’ll require before applying for a loan on gold.
- Identity proof is necessary – A passport, PAN card, Voter ID card or a Driving License.
- You’ll need address proof such as a driving license, Passport, or your gas bill along with the gas book.
- Some other important documents as required by the firm, along with the above-mentioned documents is a recent passport-sized color photograph of the concerned person.
Eligibility criteria for a gold loan:
Credit against pledged jewels never depends on your credit score, which means that a jewellery loan for individuals with lesser CIBIL score holders is also provided. The gold loan lender considers the following points for checking your eligibility criteria.
- One must be an Indian citizen.
- Your age should be between 18 to 75 years.
- The gold ornaments to be pledged should be at least 18 carats. And, in case you want to raise capital against some coins, they must be approximately 24 carats.
Working Of Gold Loans
The borrower needs to apply for jewelry finance before the loan lender. Now, the lender analyzes the application and the jewelry being pledged. Many crucial factors must be kept in mind, such as weight, purity, availability of stones, for deciding the overall credit to value for the loan.
The loan lender fixes a specific limit as soon as the LTV is decided. According to the RBI norms, the limit can never exceed 75% of your ornaments’ market price.
In most cases, the loan borrower enjoys the freedom of repayments. They can themselves select their monthly instalments, periodic outflows or bullet payments, or anything that suits their requirements.
Jewelry credits are short-term. However, there is no restriction on how you can re-pledge the same jewelry. Also, on the maturity date, you can repay the outstanding amount and close your account.
Reasons for getting a gold loan:
Below are some of the most obvious reasons that have become the main motto to take up gold loans.
- Flexible repayment alternatives.
Whenever you take up gold credit, you can get the advantages of a flexible repayment routine. You can select to pay the interest and the principal at the end, or you can also opt for an overdraft facility. This adds up to your overall convenience and ensures a smooth procedure.
- Documentation requirements:
Because you are applying for a gold loan, the lender will take up some of your necessary documents. He’ll back the collateral, which means that the loan provider knows that he will not lose his money under any circumstances. However, remember that the whole process would take a few minutes to finish.
- Capabilities to repledge:
There are absolutely no restrictions on the number of times you can apply for gold finance on the same jewelry or other gold items. It also permits the borrower to delay his repayment on the same thing. Now, the gold lender would again analyze the LTV of the ornaments kept with him and then assign them back to you along with a mortgage value every single time.
You can also get hold of a gold loan interest calculator online to see the interest charges. If we summarize the whole thing, we can say that loans on gold can be applied by those between 18 to 75 years of age.
However, people above 70 years are always preferred. The best part is that there is no restriction on the number of repayments on the same asset. This is a plus point.
