Did you know that India is one of the world’s major gold consumers? From 1987 to 2016, the demand for gold surged by more than 804%.

According to a World Gold Council study, overall gold demand will be 168 tonnes in a single quarter of 2023. This article will go over all there is to know about gold loans, from how to get one to what the advantages are.

Indian homes have a long history of gold riches.

Previously, gold was seen to be a desirable investment that could be utilised to help people in need. Gold retains its value and worth. A gold loan is all about using gold as collateral to receive cash for long or short-term aims.

We’ll go over everything you need to know about receiving a gold loan in this comprehensive tutorial. We’ll go over what a gold loan is, what variables to consider when applying for one, the documentation needed, and the qualifying criteria for getting one, among other things.

By the conclusion of this guide, you will have gained all of the necessary knowledge to effortlessly obtain a gold loan. So, let’s get this party started!

What exactly is a gold loan?

Banks and financial institutions have developed and become game changers for individuals and corporations. Gold has historically acted as a barometer of financial wealth and health. A gold loan is a sort of secured loan taken out by consumers who want cash quickly.

Where does gold come into play? Simple. For those seeking a gold loan, gold serves as collateral. Banks or non-banking financial entities store this gold safely and securely before lending it to the borrower. As a result, banks or NBFCs become lenders, while customers/people who obtain a gold loan become borrowers.

IIFL Finance is a market leader in the gold lending industry. So go ahead and check out their website right now. To find out more, follow the link.

Gold loans are often favoured over personal loans since they have cheaper interest rates.

Considerations When Applying for a Gold Loan
Just because a gold loan has a reduced interest rate does not imply you should apply for one carelessly. Consider the following things when asking for a gold loan.

The Duration

The length of a gold loan is an important component in determining repayment capabilities and time period. You also know your repayment ability well, thus understanding the gold loan tenure is essential.

Background of the Lender

Banks and non-banking financial companies (NBFCs) provide gold loans. Banks’ reputation is highly known since they are reliable sources. Before taking out a gold loan from an NBFC or another financial institution, it is critical to do a background check and verification. The last thing you want is to lose your gold or money.

Interest Rates

This is yet another important consideration before asking for a gold loan. Because gold loans have lower interest rates than personal loans, they are favoured. However, interest rates vary even across banks and NBFCs that offer gold loans. As a result, before selecting a lender, you should do a market survey.

Amount of the Loan

This is an important consideration. It is not feasible to obtain a gold loan for the full value of the gold. Gold loan lenders often give a 75% valuation of your gold as security, which is the amount offered to you.

Repayment Procedure

When asking for a gold loan, keep in mind that you must pay an EMI (Equated Monthly Installments) on a monthly basis. When the loan term expires and all outstanding debts have been paid to the bank/NBFC, the gold supplied as collateral/security is returned to the borrower.

Documents Necessary for a Gold Loan

The only papers necessary when applying for a gold loan are evidence of identification and residence. The officially recognised papers include

Identity Documentation

• The Aadhaar card
• The government issues a driver’s licence.
• Voter identification card
• Passport
• If there is an NREGA employment card, please provide it.

Address Validation

The identical documents as mentioned previously. A letter from the National Population Register would also suffice. If the address in the aforementioned papers has not been changed, the following can be used as evidence of address.

• Electricity, water, and other utility bills
• Receipt of property taxes
• Pension agreement
• Accommodation allocation letter for state government, central government, and public sector employers.

Qualification for a Gold Loan

The procedure of determining eligibility for a gold loan is simple and straightforward. Regardless of your employment situation, you can obtain a gold loan if you have adequate gold assets in the form of gold coins, jewellery, biscuits, and so on, depending on the bank or financial institution.

In addition to possessing gold as an asset, the gold must be pure. The purity of gold is an important consideration in determining if you are eligible for a gold loan.

varying banks and NBFCs have varying gold purity criteria. However, the commonly acknowledged purity is 22K.

Conclusion

We hope that you understand everything about a gold loan. It is a simple process, and the misconception that it is time-consuming and difficult is completely wrong. A gold loan is, in reality, one of the quickest ways to acquire your cash in a timely manner without having to worry about anything.

A gold loan is without a doubt one of the greatest loans available, and repayment is totally up to the lender. EMI is a simple way to repay your gold loan; this EMI covers both the principle and interest on your gold loan.

Also, keep in mind that if you fail to repay within the grace period, you will be labelled a defaulter, and defaulting on gold might result in the loss of your gold for good.

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