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An investment in gold will mostly have positive returns; that’s the mainstream belief which prevails in our society. Given the high intrinsic value of gold as a commodity, it is true to an extent. It also makes gold a liquid asset easily encashed when needed. Gold finance is one of the easiest ways to manage your immediate financial obligations. Given the high liquidity of gold as an asset, lending institutions can quickly provide gold loans.
Gold Loan Application Process
A gold loan can be explained as a type of secured loan that provides borrowers with immediate credit by pledging gold articles as collaterals. They usually provide the loan amount as a percentage of the value of gold articles pledged. One can typically get up to 80% of the value of articles deposited; it also depends on the quality of your gold articles.
The application process includes depositing your gold articles, post which the lender will conduct quality checks and ascertain the value of pledged articles based on the market value. After this, you will get your loan amount if you have the essential documents. You can pay the total loan amount in EMIs and use a gold loan calculator to determine the exact EMI you will need to pay.
Eligibility
The eligibility criteria define who all are eligible to apply for gold finance. Let’s understand the eligibility criteria based on the age limit and nature of employment.
- Age limit
For obtaining a gold loan, the applicant should be in the age bracket of 21 to 60 years. The range might vary a little depending upon the policies of the lending institutions.
- Nature of employment
Since gold loans fall under secured loans, lenders entertain a wide range of employment, including salaried professionals, self-employed, entrepreneur, farmer, trader, etc. It is also contingent on the policies of your lending party.
Documentation
Gold loans are easy to get since the lending party only provides you with an amount equivalent to 80% or less of the value of gold articles. The documents you needed to apply for gold loans include identity proof such as an Aadhaar card, PAN card, address proof, cancelled cheque, credit card statement, rent agreement. Not all documents are asked for by the lender. It is pretty subjective, but it’s mandatory to have identity proof, address proof and bank account details to get the loan.
Type of Gold Articles Needed
What kind of gold articles are needed to apply for and get gold finance from gold loan company in india? Well, a majority of lending institutions only accept gold jewellery for providing a credit against gold. Besides this, the purity quotient of your gold should fall between 18-22 karats or above for obtaining gold loans. A high purity score can increase the total loan for your pledged gold articles.
Total Loan Amount
The total loan amount provided against your gold articles depends on multiple factors, including the weight of the article, purity of gold, lending party, etc. Mostly, lenders have an LTV (Loan to Value) ratio of 75% to 80%, meaning if the market value of your gold article is around Rs. 1 Lakh, you can get a gold loan amount between Rs. 75000 to Rs. 80000. One can easily use a gold loan calculator to compute the EMIs they will need to pay for their loan amount.
