A gold loan is one of the easiest and fastest ways to meet your immediate financial needs. Unlike other types of loans, a gold loan does not require one to provide any income or salary proof. In fact, it has a comparatively lower rate of interest, requires minimal documentation, and is therefore, processed in lesser time.
Many prominent gold loan providers in India now offer discounted rates in addition to other benefits. A maximum Gold Loan of Rs 1 crore can be availed against gold.
Banks are always more comfortable lending against a security as compared to a loan application backed by no security. Higher the quality standards of a security, quicker the loan disbursement. One’s gold ornaments are always a good and solid security for a loan provider since it clearly knows the fact that in case of non-payments of loaned amount, it has the option of auctioning the gold and realising its dues.
Banks charge an interest rate in the range of 10 to 17%, depending on the net weight and purity of the gold. Moreover, banks do not ask for a guarantor while giving out a gold loan. Few loan providers also entertain pre-payment of the gold loan without charging any pre-payment penalty, though in some cases it is only around 1 %.
The minimum requirement for availing of a gold loan is one’s identification proof.
Therefore, a loanee could furnish either of the following:
- Driving license
- Voter’s ID
- Ration card
Benefits of a gold loan:
- No income or salary criteria: All loan providers before giving a loan to any loanee require that he have a strong repayment capacity, that is, he should shave a stable salary to be able to repay the gold loan.On the contrary, gold loans do not require any documentation or validation for income or salary of the person. So, even if unemployed and unsalaried, one can still avail a gold loan. This is because one is pledging a valuable asset i.e. gold in return for the loaned amount.
- Bad credit record: Unlike other loans, a gold loan does not take into consideration a bad credit history or bad debt held by the loanee. As far as one provides the bank with the gold, it is not concerned with anything related to one’s financial history or credits. Therefore, any individual with a poor credit score in need of immediate finance can avail of a gold loan.
- Lesser processing time- A gold loan does not require any time-consuming documentation, hence, it can be resorted to in times of urgent financial needs. Banks and other loan providers take only a few hours in the processing of the loan since the only document required of the loanee is identification proof.
- Convenience: A gold loan is the most convenient of all the loans since all one has to do is pledge one’s gold with the loan provider and the work is done. One can get a loan up to 80% of the market value of the gold immediately.