In India, gold loans are a popular loan option since they have affordable interest rates, rapid processing times, and minimal documentation needs. This article will explore the concept of gold loans, their benefits, eligibility criteria, and more. We will also provide you with a reliable source to apply for jewellery loanjewellery loans. Read and unfold some of the top benefits of gold loans.
What are Gold Loans?
Gold loans are offered by banks and non-bank financial companies (NBFCs) and provide a reputable secured lending solution. These loans are guaranteed by gold coins or jewellery.
There are two types of repayment options: EMI-based repayment, which allows monthly instalments, and bullet repayment, which requires the borrower to pay the principal and interest at the end of the term. After repaying their debts, borrowers receive their gold back. Gold loans are a sensible option because they provide fast money without the hassles of a lot of paperwork.
Why Choose Gold Loans?
There are multifaceted advantages of gold loans positioning them as a swift, cost-effective, and flexible financial solution in India. The following are several reasons emphasising the advantages of considering a gold loan:
Swift Processing
Gold loans have a very quick approval and disbursement process; they are frequently authorised in a matter of hours. This efficiency results from the simple verification procedure that lenders use to determine the purity and market worth of the gold. For people in urgent need of money, gold loans are the perfect option because of their speedy approval process.
Low Interest Rates
Compared to unsecured loans, interest rates on secured gold loans are lower since the collateral—gold—is gold. Lenders can offer better borrowing rates because the collateral reduces their risk. Because of this, gold loans are a desirable choice for those who want to borrow money as cheaply as possible.
Minimal Processing Charges
Gold loans have relatively minimal associated processing fees because the verification process is straightforward. Because the evaluation of the collateral is expedited, processing is less expensive and borrowers have access to affordable financing options.
Flexible Repayment Options
Borrowers can choose from a variety of repayment options with gold loans. One prominent option lets borrowers pay only interest during the loan term and pay off the principal balance at the conclusion. This flexibility allows borrowers to customise their repayment plan to meet their unique needs, taking into account a range of financial scenarios.
Majorly No Proof of Income Required
Proof of income is not generally required for gold loans, compared to many other loan types. This exemption from a condition streamlines the application procedure and increases accessibility for those with erratic or inconsistent income sources to obtain a loan. The lack of proof of income eliminates a major obstacle for people who might have trouble fulfilling conventional loan qualifying requirements.
Independence of Credit History
Due to the gold collateral used to secure the loan, the borrower’s credit history has less of an impact on the loan acceptance procedure. This feature is especially helpful for people who have less-than-perfect credit scores or are getting over financial difficulties in the past. Access to financing options is increased when the value of the asset is prioritised over the creditworthiness of the borrower.
Higher Loan-to-Value Ratio
Gold loans have an appealing loan-to-value (LTV) ratio, which can reach up to 90%. This suggests that compared to the estimated worth of their gold holdings, borrowers may be able to obtain a larger loan amount. Because of the high LTV ratio, which increases borrowing capacity, gold loans are a desirable choice for people who want to leverage a sizable percentage of their gold’s worth.
Eligibility Criteria for a Gold Loan
Gold loan providers base their loan amounts on the total weight of the pledged gold. The jewellery must have a minimum purity of 18 karats in order to qualify for the maximum loan amount. Other eligibility criteria for gold loan include:
- Anybody who owns gold jewellery is eligible for a gold loan
- Applicants have to be between the ages of eighteen and sixty.
- Business owners, independent contractors, and professionals can all take advantage of this financial alternative.
- Since the loan is secured and the lender owns the asset, a low credit score typically has little to no impact on whether the loan is approved.
How to Apply for a Gold Loan?
There are many gold loan providers available in India. You can apply for a goal loan with ease. One of the top providers of a wide range of financial products and services is IIFL Finance. As a favoured Gold Loan Financing Company, IIFL Finance has a strong presence in India, with over 2,600+ branches. The following are the steps to apply for gold loan at IIFL Finance:
- Find the closest branch and just bring your gold in to complete the easy process.
- For a quick and easy approval process, provide proof of your ID, proof of address, and gold.
- The uncomplicated process and gold appraisal ensure that the accepted loan amount is transferred to your account or in cash as quickly as possible.
Conclusion
The combination of quick processing, gold loan interest rates, minimal processing charges, flexible repayment options, credit history independence, and a high loan-to-value ratio makes gold loans a preferred choice for various borrowing needs. To ensure a favourable and secure lending experience, borrowers should be prudent and only borrow as much as they can reasonably repay within the agreed-upon conditions.
IIFL Finance makes applying for a gold loan easier and more convenient for customers. Customers will have a seamless experience because of the streamlined documentation procedure.
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