The value of gold is understood and appreciated by everyone including banks, Non-Banking Financial Companies (NBFCs) and money lenders. Investing in gold would prove to be a blessing especially when you are in need of money.
Depending on its purity and weight a bank or an NBFC grants a certain amount as a loan against gold to any person. This is one of the easiest ways to get a loan because it is granted against the security of collateral.
Compared to the other types of loans sanctioned through a bank a gold loan has a much lesser rate of interest. You also have varied tenure options depending on the bank or NBFC you’ve chosen and the processing time required for sanctioning the loan is only a few hours.
The Main Features Of A Gold Loan
- A maximum LTV (Loan to Value) ratio of 75% can be availed through a bank and an NBFC.
- Interest rate is minimum compared to other types of loans. This is between 10%-20% on average.
- Quick disbursement of the loan.
- No processing fee is charged by most banks.
How To Apply For A Gold Loan?
Given below are the steps involved in pledging your gold jewelry for a loan.
- Approach a reliable bank or NBFC with your gold jewelry.
- The Bank/lender evaluates your gold jewelry to decide on its purity and weight because loan eligibility depends mainly on these two factors.
- The bank decides on the amount to be granted and calculates the interest rate as well.
- Fill in the application form.
- Attach all the documents and photographs required.
- The verification process of the jewelry and documents takes a few hours.
- On successful verification, the loan amount is disbursed by the bank or NBFC.
Evaluation Of Gold Jewellery
The bank evaluates your gold jewelry in the following ways before sanctioning a gold loan.
- Check for its carat range. (Only the gold jewelry that falls within 18-24 carat range is considered for a gold loan.)
- Check for hallmark. (Hallmarked jewelry assures the bank of its purity and you get a higher amount as a loan)
- Check for the purity of gold and total weight of the gold.
- Reduce the weight of precious and semi-precious stones inlaid in the jewelry.
- Calculate the maximum amount that can be sanctioned along with the rate of interest.
You need to submit the following documents with the bank while applying for a gold loan.
- A duly filled application with a passport size photograph of the applicant attached.
- Pan card/Election ID card/Passport as proof of identity
- Driving license/ PAN Card/Passport/Debit card with a signature/ Government ID card as proof of the applicant’s signature.
- Passport/Driving license/electricity bill/Passport as proof of address. Those living in a rented house can use their rental agreement as well.
Time Required For The Disbursement Of Loan Amount
On successful verification of the gold jewelry and the documents submitted, the bank/NBFC disburses the loan amount in few minutes or an hour.
The process of applying for a gold loan requires a minimum amount of documentation. It is hassle-free and quite fast compared to applying for a personal loan. Make sure you compare between a few banks and NBFCs before deciding where to apply for a gold loan.
This blog is maintained by the Finaura team. Finaura is a solution that will help you find the best gold loan solution from gold loan company nearest to you. If you have any queries please feel free to contact us. Call us on +91 484 2388285 or email us at [email protected]