When it comes to taking out a gold loan, there are certain eligibility criteria that you must meet to be approved. In addition, you will also need to provide specific gold loan documents to support your application.
What are the eligibility criteria for a gold loan?
The most important eligibility criterion for a gold loan is that the applicant should have some gold to offer as collateral. The amount of loan sanctioned is generally decided based on the value of the gold pledged. Other factors like the credit score, employment history, and borrower’s repayment capacity are also considered while approving a gold loan.
Documents required for gold loan
Gold loan documents may vary from lender to lender, but generally, you will need to submit the following documents:
- Identity proof- This can be in the form of your PAN card, passport, driving license, voter’s ID card, etc.
- Address proof- Submit one of the following as your address proof- passport, utility bills, rental agreement, etc.
- Photographs- You will need to submit 2 recent photographs.
- Gold jewellery- The gold jewellery you are pledging as collateral for the loan needs to be submitted to the lender.
- Loan documents- Once approved for the loan, you must sign the loan agreement and other relevant documents.
Other documents that may be required include your bank statements and income tax returns.
How to get your gold loan sanctioned?
Getting your gold loan sanctioned is easy if you have all the necessary documents in place. However, it may become difficult to get your loan approved if you do not have the required documents or do not meet the eligibility criteria. The best way to ensure your loan gets sanctioned is to approach a reliable and reputable gold loan provider such as banks, NBFCs, or financial institutions.
When you approach a gold loan provider, they check your eligibility criteria and then ask for some documents. The documents required may vary from one lender to another, but generally, they would require your KYC documents, income proof, and bank statements. Once the lender is satisfied with all your documents, they will sanction your loan and release the funds.
What are the different gold loan features?
Below are some of the gold loan features:
- Gold loans are typically structured as term loans, with a fixed interest rate and monthly payments.
- The loan amount is based on the value of the gold pledged as collateral, and the loan can be used for any purpose.
- Gold loans typically have a lower interest rate than unsecured loans, making them an attractive option for borrowers who may not qualify for other types of loans.
- Gold loans are typically repaid in full when the loan comes due, and the borrower is responsible for repaying any remaining balance.
- If the borrower defaults on the loan, the lender may seize the gold pledged as collateral and sell it to repay the loan.
- Gold loans are often used to finance small business ventures, purchase gold jewellery, or cover emergency expenses.
Points to keep in mind while taking a gold loan
- Gold loans are becoming a popular way to tide over financial difficulties. But there are certain points one must remember while taking a gold loan.
- The first and foremost point is to check the credentials of the lending institution. Fraudsters duped people by offering them gold loans at exorbitant interest rates. So, thoroughly checking before taking a loan from any institution is important.
- Another point to keep in mind is the rate of interest. Various lending institutions offer gold loans at different rates of interest. It is advisable to compare the rates and then take a loan from the one which offers the best deal.
Gold loans are considered one of the easiest and quickest ways to avail of a loan. The eligibility criteria for a gold loan are not very stringent, and the required gold loan documents are also minimal. One can easily avail of a gold loan by pledging their gold jewellery or other gold assets as collateral with a financial institution. The interest rate on gold loans is also relatively lower than other types of loans.
Thus, a gold loan is an ideal option for those who are looking for quick and easy financing. However, it is important to remember that one should only avail of a gold loan if you are confident of repaying the loan amount within the stipulated time frame.
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