For most Indians, gold holds a special significance. Gold symbolises prosperity and is integral to traditions and rituals for us Indians. No wedding, festival or celebration is complete without the glam of gold.
The precious metal is a store of wealth and a sentimental heirloom, passed down through generations. However, in times of financial need, carefully accumulated gold can prove useful in another way as collateral for a gold loan. Read on to understand the benefits of gold loans and how a gold loan can benefit in times of need.
What is a Gold Loan?
A gold loan is a secured loan where a customer pledges their gold jewellery or ornaments as collateral to a bank or financial institution. In return, they receive a cash loan up to a certain percentage of the gold's value. Gold loans allow you to unlock the value of your idle gold assets and get funds in hand quickly. The hassle-free process requires minimal documentation, making gold loans ideal for meeting emergency expenses or capital needs.
Advantages of Financing with a Gold Loan
Here are some major advantages of choosing the best gold loan for your financial needs:
1. Fast Approval and Disbursal
The biggest USP of a gold loan is quick access to funds. As it is a secured lending option, financial institutions can approve and disburse the loan within hours once you submit your KYC documents and gold ornaments.
The collateral covering the loan means lending companies can bypass lengthy verification of income, credibility, etc. This results in a seamless borrowing experience when you need money urgently.
2. Low Interest Rates
Interest rates on gold loans are lower than those on unsecured loans, such as personal loans or credit card debt. Rates generally start at around 10%* p.a., depending on the financial institution.
3. Flexible Repayment Options
Borrowers can tailor their repayment structure according to cash flow availability. You can pay interest-only EMIs during the loan tenure and the principal at maturity. Some financial institutions may allow part-prepayments as well.
4. No Credit History Required
Gold loans are approved based on the quantity and purity of gold pledged, not your credit score. This makes it easier for self-employed individuals or those with poor credit to secure financing.
5. Improves Your Credit Score
Timely repayment can enhance your credit score as the loan gets reported to credit bureaus. This improves your profile for future loan applications.
6. Liquidate Gold While Keeping It Safe
Opting for one of the best gold loans allows you to unlock the value of your gold in times of need while keeping it safely stored with the financial institution. Banks and NBFCs provide secure storage lockers for pledged ornaments and ensure the safety of your gold.
7. Foreclosure Without Penalty
Most financial institutions allow the foreclosure of gold loans without levying heavy charges or penalties. You can repay the full loan anytime and redeem your gold quickly.
8. Loan Renewal Facility
Many financial institutions offer loan renewal or 'top-up' facilities if you need continued access to funds. You can renew the loan on maturity based on your repayment track record and increased gold valuation.
9. Minimal Processing Fee
With gold as collateral, financial institutions do not need to invest much time or effort in approving the loan. This results in low to zero processing fees in most cases.
Shriram Gold Loan Eligibility
Gold loan eligibility norms are fairly relaxed compared to other retail loans. The main requirements to apply for a gold loan are:
- Minimum age - 18 years
- Maximum age - 75 years of age
- Income - No minimum income proof required.
- Employment - Salaried or self-employed individuals
- Gold jewellery - Minimum grams of gold required by the lender.
- KYC documents - Photo ID and address proof.
If you meet the above criteria and pledge adequate gold collateral, you can get approval for one of the best gold loan options in the market.
Conclusion
Gold loans offer a convenient way to unlock the latent value of idle gold assets and access funds when required. With minimal documentation and quick approval, they provide liquidity to meet pressing financial needs or goals.
Lower interest rates than other loans make gold loans an affordable borrowing option. Their flexible repayment structure aligns with individual cash flows, making gold loans a popular financing avenue for many Indians.
If you need urgent funds for any purpose, consider taking the best gold loan you have access to by leveraging existing gold jewellery. It provides immediate liquidity while keeping the gold safely in the loan provider’s custody. Choose a trusted gold loan product, like Shriram Finance’s gold loan offerings for the instant gold loan experience, attractive interest rates and maximum eligibility.
FAQs
1. Can I get the best gold loan amount against gold coins?
Yes, most banks and NBFCs accept gold coins and jewellery as collateral for a gold loan. The important aspect is the purity and weight of the gold, which determine the loan amount.
2. Will my credit score impact my gold loan eligibility?
No. Credit scores don’t have too much of a significance to approve gold loan application since it is secured by pledged gold. Your eligibility depends on submitting KYC and adequate gold collateral.
3. Can I foreclose my gold loan anytime?
Yes, early foreclosure is allowed on gold loans without penalty charges. You can repay the full outstanding and redeem your gold assets.
4. Is gold valuation standardised across financial institutions?
When applying for a gold loan, the amount you can borrow depends on two main things - the purity of your gold and the current market rate for gold. Gold with higher purity levels will result in a higher loan amount. The Reserve Bank of India (RBI) has established standardised methods that gold loan providers use to assess the value of gold ornaments and jewellery.
5. Can I get a gold loan for business purposes?
Yes, you can use a gold loan for personal or business purposes without providing the financial institution with end-user details. The loan is sanctioned solely on gold collateral.
