Buying gold is an integral part of Indian consumer behaviour. A significant proportion of the consumers wish to purchase golden ornaments and treat gold as a sound investment option. However, not many know that you can use gold to avail loans whenever you have a financial requirement. You do not have to sell your gold for funds as multiple lenders would allow you to pledge your gold in return for finances. Good news is that since numerous financial institutions are offering gold loans in the market, you can avail loans at competitive interest rates. However, note that there is a brief procedure you need to follow to avail loans without any hassles.
Steps to follow while applying for a gold loan
The process to apply for an instant gold loan can vary from one lender to another. However, the majority of the lending institutions follow the steps as follows:
- Visit a bank/NBFC which provides cash for a loan with necessary documentation and gold.
- The financial institution will perform gold purity checks and determine its weight to evaluate the market value.
- The lender can approve up to 75% of the value of the gold and provide the gold finances to the borrower.
- Once the market value is determined, the documents go through a verification process.
- The loan amount is disbursed to the borrower.
Alternatively, you can apply for an instant gold loan through the website or mobile app of the lending institution. However, you would be required to visit the branch to submit the gold articles which will be verified for purity. You can then register with the bank/NBFCs official website or mobile app to avail loans through an online facility. You can also avail a loan through loan portals or go directly to the nearest branch of your lender to make the process quick and easy.
Things to consider while applying for a gold loan
- The foremost factor to consider while applying for gold finance is to choose a reliable lender who has been in the market for several years and gained trust among the consumers.
- Choose a lending institution which has simple processes and documentation to avail loans. There are a few lenders who can provide finances in minutes if everything is in order.
- There are a few financial institutions which have no penalty charges for prepayment. Such a facility would save a considerable amount of money for the borrowers.
- Has safe custody of your valuable golden items so that you do not have to worry about the safety of your assets.
- Choosing a scheme that would best suit your requirements. For example, there are loans exclusive for women that can provide better benefits to the borrowers.
- There will be gold loan calculators available in the majority of lending institutions’ websites which you can leverage to find out the interest rates, tenure, and other factors.
- Any Indian more than 18 years of age is eligible for a gold loan, and he/she can avail the same with proper documentation.
- Most of the lenders do not require any third-party guarantor to avail loans from them.
- The pledged gold will be returned to you once you have repaid the full amount along with interest.
- The lending institutions typically make the repayment phase easier for the borrowers and also show maximum flexibility in case the borrower has any hiccups to make the payment.
- Using the pledged gold, you can even avail a minimal amount to meet your immediate financial requirements. The interest would depend on the principal amount and the market value of the submitted assets.
- Make sure that you evaluate the gold using the in-house validators of the lending institution so that there are no concerns related to the market value of the gold pledged.
Availing gold loans have become more effortless in the age of digitalization, but due diligence must be practised to choose the most reliable lender for yourself. You do not want to pledge your valuable assets to a lender who does not provide greater service and does not add any value proposition to your transaction. The objective is to find a financial partner who provides greater benefits and does not create any hassles in your lending process.
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