Smart Ways to Use Your Gold Jewellery for Instant Loans
Beyond its emotional and cultural value in Indian households, gold is also considered a valuable financial asset. In times of need, gold jewellery can be used to quickly access funds through gold loans offered by financial institutions.
Gold loans allow you to get a loan against the value of your gold ornaments. It is one of the quickest and most convenient ways to meet urgent financial needs. The process is transparent and flexible, with attractive interest rates.
In this blog post, we shall take a look at some smart tips on how you can use your gold jewellery to get instant loans from financial institutions:
Evaluate Your Gold
The first step is to evaluate the amount of gold you have and its purity level. Typically, lending institutions accept gold ornaments of 18 karats to 22 karats purity for availing a gold loan. Coins and bars also qualify for some loan providers.
Segregate the gold by karats and weigh the jewellery using a digital weighing scale. This will give you an estimate of the quantity of gold you have. It’s best to segregate your precious gold jewellery from low-purity pieces to get maximum value.
Pick a Reputable Lending Company
Research and pick a reputable lending institution that offers transparent services and reasonable interest rates. Most public and private sector banks, as well as NBFCs, offer gold loan services now.
Compare interest rates, loan-to-value ratios, processing fees, repayment options, and other charges. This will ensure you get the best loan deal. It’s advisable to check online reviews and feedback about shortlisted loan providers.
Opting for established banks and NBFCs ensures timely access to funds in a seamless manner. The process can be paperless and flexible.
Understand the Loan Amount You Can Get
Based on the quantity and purity of gold, financial institutions will offer you a certain percentage of its market value as a loan. This is called the loan-to-value (LTV) ratio.
For example, if your gold jewellery is worth ₹5 lakhs and the LTV ratio is 75%, you can avail a gold loan of up to ₹3.75 lakhs against it. The remaining value stays as a margin with the loan provider.
Compare LTV ratios and pick the best option to maximise the loan amount against your gold.
Apply Online or Visit the Nearest Branch
Most leading banks and NBFCs, like Shriram Finance, allow you to apply for a gold loan online through their website or mobile app. The documents that are generally required are proof of your identity and address.
Alternatively, you can visit the nearest branch of your chosen financial institution. Meet the relationship manager and submit your KYC documents along with the gold ornaments to be pledged. The process hardly takes any time if your paperwork is in place.
Get Your Gold Valued
The gold jewellery you offer as collateral will be valued by the lending institution. This is done through expert appraisers to determine the exact gold weight and purity.
Valuation is done in your presence and a certificate is provided. The value of your gold determines the loan amount you are eligible for. Loan disbursal happens quickly once the valuation process is completed.
Optimal Interest Rates and Tenures
One of the biggest advantages of a gold loan is the affordable interest rate, which makes it cheaper than personal loans. Generally, interest rates start at about 7% p.a. and vary across loan providers.
Compare rates and EMIs before selecting any one financial institution. Opt for shorter tenures of up to 12 months to get lower EMIs and pay less interest. You also have the flexibility of early repayment or premature closure.
Use the Funds for Any Purpose
The loan amount can be utilised for any purpose without restrictions. Be it a medical emergency, children's education fees, home renovation, wedding expenses, or a business need - a gold loan offers funds instantly.
You only need to pledge your gold as collateral without any end-use restrictions on the sanctioned loan amount. This makes gold loans a flexible financing option for urgent needs.
Make Timely Repayments
Ensure you start paying EMIs on time once loan disbursal is completed. Timely repayments will maintain a good credit score and relationship with the loan provider.
You can choose from monthly, quarterly, half-yearly or annual repayment options as per your cash flows. Set up automatic debits from your accounts to avoid missing EMIs and extra charges.
Get Your Gold Back
Once you repay the loan principal and interest amount in full, the lending institution will return your pledged gold ornaments to you. This enables you to meet your cash needs without having to sell your precious gold permanently. It gets stored securely in bank lockers till you close the loan.
Different Options for Joint Applications
Gold loans can also be availed jointly in case the gold belongs to family members or your spouse. Discuss the joint application process with your loan provider and fill out the paperwork for seamless approval.
Conclusion
Gold loans provide an excellent means to meet urgent financing needs in a completely secured manner. Your personal gold acts as collateral, so there are no risks or elaborate procedures involved. With minimal documentation, quick approval and attractive interest rates, gold loans are undoubtedly one of the smartest ways to access funds instantly.
By selecting a reputable financial institution and pledging adequate gold ornaments, you can avail a sizeable loan amount to take care of any emergencies. Timely repayment will ensure you get your valuables back safely. So, use your idle gold judiciously to get a gold loan and fulfil your financial requirements stress-free.
