Gold Loan

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Gold loan is a type of secured loan i.e. the loan is provided against collateral in the form of different types of gold jewellery or gold coins. You have to deposit your gold with the lender i.e. NBFC or bank and you get the deposited gold ornaments or coins back only after you have paid back the loan amount in full including interest. Gold loan business, being secure, features short processing times, a low interest rate and short to medium term tenure. You can avail several gold loan schemes from banks and other financial institutions. The amount of loan against gold you will get depends upon the value of the gold you surrender for the loan. The value and purity of the gold will be checked before the bank or NBFC takes possession of the gold. This loan is a good option, if you are looking for instant liquidity. Also, since the approval of this loan does not depend upon your credit history or income, you need not worry about your adversely impacting your credit score nor scramble for income proofs for loan approval.

Features and benefits of Gold Loan

  • Gold loans feature a low interest rate as compared to most other loan options
  • Gold Loans tenure ranges from a few days to 5 years or more depending upon the lender.
  • The repayment options on gold loan can be selected as per the choice of the borrower.
  • In most cases, the lender does not charge a pre-payment penalty on gold loans.
  • Minimal documentation required and PAN Card is not mandatory for this loan
  • Fast disbursement i.e. loan is provided within a few minutes to a few hours.

Eligibility Criteria for Gold Loan

There are no specific gold loans eligibility criteria to satisfy to get gold loan. Anyone can apply for gold loan, as long as the person seeking a loan owns the gold. The sanctioning gold loan is determined by the value of gold the borrower submits.

✔ The person should be above the age of 18 years.
✔ He should own gold

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What are the documents required for Gold Loan?

  • Unlike other loans where documentation is an important part of the process, gold loan documents required to be submitted are only the basic KYCs like:
  • Two passport size photographs.
  • A copy of identity proof documents such as your passport, driving license, Aadhar Card, ration card etc.
  • A copy of address proof documents such as your electricity bill, telephone bill, other utility bill etc.

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Frequently Asked Questions

Currently, all forms of gold jewellery including rings, necklaces, bangles etc. are accepted as security. Some banks accept specific gold coins of up to a certain weight, but gold bars are not yet accepted as collateral. In case the gold ornaments are encrusted with valuable gems, the valuation costs would not include the value of gems and your loan amount will be decided based on the weight of gold.

Your gold collateral needs to be deposited with the bank or NBFC, where it is stored in a secure vault with CCTV security as well as round the clock security presence. You will get the gold kept as collateral back once you have paid back the loan principal plus interest in full.

Yes, you do not need to have a good credit score to avail a gold loan as the loan is a secured one. So, for gold loan eligibilityyou just need to have gold andthose with low credit score or default repayments are eligible to get a gold loan. However, gold loan is taken into account in your CIBIL report and hence you should pay regular EMIs to improve your CIBIL score.