A gold loan needs an asset to be pledged as collateral and is, therefore, one among the many secured loans. The gold loan is provided authentically by banks and Non-Banking Financial Companies(NBFCs) with affordable interest rates and flexible features. As unsecured loans don’t require collateral the eligibility criteria and the documents required is high and more. However, in a secured loan the collateral during the loan term is temporarily owned by the bank or NBFC and is returned to the borrower only after receiving the owed money in full(principal amount plus the total interest).
But, besides pledging an asset, a bank or NBFC also have other demands. The applicant applying for a gold loan must be in the age range of 18 and 75 years. In addition, a government authorised ID proof is mandatory. PAN card, Aadhar card, Voter ID, driving license, passport are accepted as ID proofs by the lenders. Also, an applicant can apply for an agricultural gold loan if they have farming land in their name as proof. With these documents, a gold loan can be benefited.
Loans like personal loans have many documentation requirements, and the chance of getting rejected is high, but in a gold loan, as seen above, it only needs the basics. Hence, the probability of rejection is low but not NIL. One way of getting a gold loan rejected is by submitting an invalid ID proof or an expired one. For instance, passports and driving licenses have expiry dates, and if your submitted proof is expired, then a bank or NBFC can reject your gold loan application. Another probable reason for rejecting a gold loan is pledging a gold article(s) of purity less than 18 carats.
If the purity of the pledged gold is 16k, banks and financial institutions do not accept that gold as valid collateral and may reject your gold loan because of that. Also, in the case of an agricultural gold loan application, false land proofs or the unavailability of Kissan Credit Card may get an agricultural gold loan rejected. A loan rejection looks bad in a credit report and affects your credit score immensely. Therefore, make no mistake in the application submission and the documentation validity. Though unnecessary for a gold loan, a credit score is mandatory for availing most other loans and especially unsecured ones.
A gold loan can be applied using the internet from your home quickly or by visiting the bank or NBFC in person. Both the modes are simple and efficient. By filling in the basic details(name, age, address,etc..,) submitting the documents, and pledging the asset, one can rapidly avail a gold loan, and the loan amount disbursal is done immediately after the application’s verification process and approval. A gold loan is resourceful, and a customer can opt it for any purpose. Be it construction, business expansion, home renovation, weddings, or higher education, banks and NBFCs are readily available to fund your financial need. The LTV ratio is a maximum of 90% in a gold loan, and up to Rs one crore is sanctioned as a loan amount by the authorised finance providers. The interest rate starts at 7% per annum, and a gold loan interest calculator can be used to calculate the interest rate for the loan amount and tenure chosen. The tenure available is at most 36 months and at least three months in most banks and financial institutes. As an added advantage, the processing and prepayment fee are also NIL for a gold loan by most financiers.
A Kerala based financial company is Manappuram Finance Limited. And Manappuram gold loan stands as one of the best gold loans in India. The NBFC has millions of customers vouching for its reliability and trustworthiness with branches worldwide.
Read More:- How banks check the purity of Gold in Gold Loan