How to Apply for a Gold Loan | Steps to Apply for Gold Loan

A lot of individuals struggle to meet their everyday needs. That’s because the pandemic-related decline in the global economy is apparent. The only way to help you fulfil your financial obligations is with a gold loan.

Gold loans are secured loans where you pledge your gold assets as security to get cash for unforeseen expenses and other needs. If you require short-term finance, gold loans are more affordable than credit cards and personal loans. But before approving a financial arrangement, full awareness is required.

What Are Gold Loans?

In return for gold-related goods, lenders provide their customers with loans that are secured by gold. Typically, a percentage of the gold’s value is provided as the loan sum.

The maximum credit amount that may be obtained depends on the gold loan amount per gram of gold, the amount of the gold being pledged, and other eligibility restrictions. It’s crucial to understand these factors in addition to having a fundamental understanding of what gold loans are.

Borrowers must return the loan in instalments during the loan to get their gold items back (which might be made monthly or according to other predetermined repayment schedules, depending on the loan terms).

When you understand what gold loans are and how to get them, you’ll see that they’re the best to use for important occasions and costs like weddings or unexpected obligations if you are convinced you can repay the loan quickly.

Benefits of Gold Loan

When obtained from respectable businesses, the best gold loans provide the borrower with a broad variety of benefits. Following are a few benefits of a gold loan:

• Little paperwork is needed since your gold will serve as collateral for the loan. Identity and address documents must be provided.
• No proof of income is needed.
• You have the option of paying the principal balance in full or only the interest after the loan period.
• You might save a lot of money since gold loans offer lower interest rates than personal loans.
• A gold loan has benefits such as fast processing and rapid distribution of borrowed funds.
• Loans secured by gold may easily be converted to cash.
• This loan has security. Therefore, having a poor credit history won’t prevent you from acquiring a loan.
• Gold loans have either zero or extremely low processing fees.

How Do Gold Loans Operate?

The fundamentals of gold loans are straightforward. A gold loan requires the customer to provide the gold to a lender in the form of coins or jewellery. It is possible to borrow up to 75% of the value of the pledged gold products. An Indian citizen who possesses items containing gold is eligible to apply for a gold loan.

When you present the gold item to the lender, an assessor will look it over to make sure it is of good quality and is worth what it is currently selling for. As soon as you agree to the loan balance and any associated fees, you may start the paperwork.

After accepting your loan, the lender will retain the gold and deposit the funds into your bank account (in possession, not ownership). The loan balance plus a lender’s interest should be repaid during the repayment procedure.

A substantial loss or price decline for gold is often not very likely. Lenders are motivated to lend money because gold’s value is guaranteed to rise over time, unlike the other assets that can be used as security.

Steps to Apply for Gold Loan and Eligibility Criteria  

Online or offline applications are accepted for gold loans. You must go to your nearby branch to submit an offline loan against a gold application. You may follow the procedures listed below to apply for a gold loan online:

• First, go to the  Piramal Finance website.
• Select “Gold Loan” from the list of options under “Apply Now.”
• Complete the online gold loan application by providing your name, contact information (including email address), and residence address.
• Choose your state, city, and closest branch in the fourth step.
• To submit your gold loan application, click “Submit.”
• Write down the number on your reference id. A representative from the company will contact you soon.

         Eligibility Criteria  

• You must be at least 18 years old to qualify for the eligibility criteria for a gold loan.
• Your source of income must be stable. 

What Paperwork Is Needed in India to Get a Gold Loan?

The following records are necessary for an Indian gold loan:

• A PAN card, an Aadhar card, a driver’s license, a voter’s ID card, or a duplicate of a passport may be used as identification.
• Aadhar cards, driver’s licenses, voter ID cards, passport copies, landline/postpaid bills, water bills, electricity bills, or rent agreements (together with the most recent owner’s electrical bill) are all acceptable forms of identification as proof of residency.
• A pair of current passport-sized pictures

 Interest Rates on Gold Loans

Gold loan interest rates range from 7% to 18%. The main things that affect the interest rate are the size of the loan and the borrower’s monthly income. The gold loan interest rate will be higher if you borrow more money. The interest rate will be lower if you have a stable, high income. The loan’s value is directly linked to how much gold you have. The purity of the gold doesn’t make a big difference in the interest rate. If you pay off the loan well before the pre-scheduled payback term of 3-6 months, certain NBFCs and banks may assess a foreclosure cost of up to 2%, excluding GST. A minimum service charge of Rs. 500, or 0.5% to 2% of the loan amount, is further charged.

Conclusion 

One of the first things you should consider before applying for a gold loan is the interest rate. Even though they have high-interest rates, gold loans are often obtained since they are a quick method to get funds. Take your time taking out a loan with a high-interest rate. The more you must pay each month, the greater the interest rate.

To know more about how to apply for a gold loan, follow Piramal Finance.