Are you planning to take a loan? When you plan to take the loan, you need to consider your exact need and CIBIL score. Though various loan options are available, it is important to compare the interest rates and know about the documentation needs. There is no better option than a gold loan for a loan that one can easily apply and avail. Various financial institutions offer gold loans; it is crucial to know the aspects one should consider before applying.
About Gold Loan
Gold loan is one of the most common and secured loans that any individual can apply for. It is the only loan available to everyone with the least documentation and even with a low CIBIL score. The gold interest rate is also comparatively lower than various loans and even lower than credit cards.
The basic criteria for the gold loans remain the same throughout the financial institutions that include:
- The applicant should be Indian between 18-75 years of age.
- The applicant should be working and can be either salaried or self-employed.
- The applicant above 70 years should be able to provide a co-applicant.
- The applicant should be able to pledge gold of a minimum of 18 carats for valuation.
Apart from these basic gold loan requirements, there are a few other things that one should know before applying for a loan.
7 things to Know While Applying for Gold Loan
Whether you are looking for a small loan amount for a year or a sizable loan amount for an extended period, knowing the basic points that affect the gold loans is crucial. The top 7 things that one should know before applying for the gold loan are as follows:
- Loan amount range
When you apply for a gold loan, the first question is the amount you can apply for. Though the RBI has the LTV upper cap of 90%, still an individual can apply for a gold loan ranging between Rs. 20,000 to 20 lakh. This is the general range and may vary for financial institutions.
- Tenor and interest
Generally, the gold interest rate starts from 11% pa and is available for as low as six months and as high as three years. Since the loan is available at a low rate and low time, it is great to apply and meet the immediate needs.
- Available with low CIBIL
Gold loan is available to all individuals whether they are self-employed or are businessmen. Individuals with low CIBIL scores can also apply for a gold loan, which can help them repair their credit history by making timely repayment.
- Simple documentation
Gold loans are easy to obtain and need minimal paperwork. It just requires the individual to submit KYC paperwork, passport photos, and evidence of income. Also, the gold with 18-24 carats is only needed
- Repayment flexibility
Gold loans provide additional repayment flexibility as well as choices. You can make monthly EMI payments or service only the interest and pay the principal at the end of the term. It helps the borrower to better plan finances and ensures smooth management.
- Swift approval and disbursement
The qualifying conditions for the gold loan are simple and easy to satisfy. The typical duration for the entire procedure, from document submission to approval and disbursement, is 48-72 hours.
- Security for gold deposit
When you apply for a gold loan, the pledged gold is kept in the safe custody of the banks or NBFCs. The same will be returned to the borrower once the payment for the loan is made. So, the borrower can be assured of the safety of the gold during the loan period.
Gold loans are the best choice to make in the time of a financial emergency. The option is quite straightforward, making it a preferred option. Though banks and NBFCs offer a gold loan, applying at the NBFC can help you get faster processing. The gold interest rate is an important factor and must be considered before applying for a loan.
Lenders like Bajaj Finserv offer gold loans up to Rs. 1 crore. Borrowers can avail of gold loan financing by visiting the lender’s website and filling out the online gold loan application form. Additionally, one can also visit the nearest Bajaj Finserv branch to avail of a gold loan.