In India, where almost every household possesses some gold ornaments, availing of a gold loan is the easiest and fastest way to secure finances. Gold loans are secured advances offered against ornaments as collateral and have no end-use restrictions. Due to gold’s high liquidity and equity, financial institutions offer sizeable funds against gold at nominal interest rates and minimal documentation. These make gold loans ideal to address urgent requirements like medical emergencies or business needs. To avail of a gold loan from top financial institutions at competitive rates, an individual only has to carry his/her gold ornaments and a few documents. Gold loan eligibility requires only a few simplified terms and no requirements for a high CIBIL score.
Documents required for gold loan eligibility
You need to keep only a few essential gold loan documents at hand to enjoy instant approval. These are:
- Identity proof
Borrowers have to provide one of the following documents for ID proof.
- Voter ID Card
- Aadhaar Card
- PAN Card
- Photo credit card
- Driving license
- Defence ID card
- Photo identity card issued by either the Central or State Government
- Address proof
The following documents serve as address proof for gold loans:
- Aadhaar Card
- Ration card
- Voter ID card
- Utility bills (telephone, electricity or water bill up to 3 months old)
- Bank account statement
- Letter from any authorised individuals
Borrowers may also need to carry their latest income proof and some essential gold loan documents. Carrying all documents saves time and makes the approval process easier and faster.
Apart from the documents required, it is also crucial to check the eligibility requirements before applying for this advance.
Gold loan eligibility criteria
Unlike other loan types, gold loans impose less stringent eligibility criteria. Irrespective of profession and income, anyone with sufficient gold assets can access funds against it.
The only criteria for gold loan eligibility are:
- Borrowers must be aged between 21 and 70 years
- They must be salaried or self-employed individuals
- Any professionals, traders, farmers and businessmen can avail gold loans
In addition to the gold loan eligibility criteria and documents required, potential borrowers may want to consider the purity of their gold. Another point to remember is that gold loans are usually offered against only gold jewellery and not gold coins or bars.
Gold loan: Features and benefits
Some of the most common features and benefits of gold loans are:
- Easy and flexible repayment: Gold loans offer flexible payment options, including EMIs and lump-sum payments. You can opt to pay the interest periodically and the principal as a lump sum at the end of the tenor. Alternatively, pay the interest upfront and the principal at the end of the tenor.
- Easy approval: With minimal documentation and gold loan eligibility criteria, these loans are convenient and offer easy approval. Some financial institutions offer a safe evaluation process so you can get the jewellery appraised from the comfort of your home.
- High-security protocols:Lenders store all gold articles in top-of-the-line vaults with 24×7 surveillance to keep them secure. Some offer insurance for the gold against theft and misplacement in due course of the tenor.
- Part-prepayment and foreclosure: Some NBFCs allow borrowers to partially prepay their loans or foreclose them before the end of the tenor with zero additional charges.
As gold is an equitable commodity and is present in most homes in India, financial institutions offer great benefits against gold loans. The nominal interest rates, part-payment options, and easy loan approval make gold loans a preferred mode of funding for many.