Before you apply, it is beneficial to know the eligibility to get a gold loan and what documents you may need. Following is a simple guide to help you get started.
Gold Loan Eligibility Criteria
Here are the key factors that determine whether you qualify for a gold loan:
1. Age Criteria
Most lenders offer gold loans to individuals aged 18 to 65. However, the applicant's financial standing, creditworthiness, or income may allow for exceptions.
2. Type of Gold Accepted
Only 22-karat or 24-karat gold is typically accepted as collateral for a gold loan. Some lenders may accept lower karat gold as well, but it may impact the loan amount that can be offered. It's important to ensure that the gold you plan to pledge meets the lender's standards.
3. Proof of Ownership
You must prove the gold is yours using receipts, jewellery certificates, or other purchase proofs. This ensures the gold isn’t tied to any previous loans.
4. Credit Score
A good credit score can improve your chances of getting a gold loan approved quickly. However, in many cases, the lender may approve a gold loan even if the applicant has a low credit score, since the loan is secured by gold.
5. Income Source
Lenders check if you have a steady income to repay the loan. Even modest earnings from a job, business, pension, or farming could make you eligible for a gold loan.
6. Loan-to-Value (LTV) Ratio
The Loan-to-Value (LTV) ratio determines the amount you can borrow against the value of your gold. The LTV ratio for gold loans is typically up to 75% of the gold’s value. The higher the LTV ratio, the greater the loan amount you can get. However, keep in mind that a higher LTV also increases the lender's risk.
Documents Required for a Gold Loan
Gold loans need fewer documents than other loans, but you might be required to provide these to confirm your identity, gold ownership, and repayment ability:
1. Identity Proof
To verify your identity, you must provide one of the following documents:
- Aadhaar Card
- Voter ID
- Passport
- Driving Licence
- PAN Card
The document should be government-issued and include your photograph and personal details.
2. Address Proof
Proof of your address is necessary to verify your current residence. Acceptable documents include:
- Utility bills (water, electricity, gas)
- Aadhaar Card
- Voter ID
- Passport
- Bank statement or passbook with your current address
3. Proof of Ownership for Gold
As mentioned earlier, proof of ownership of the gold is essential. You can provide:
- Jewellery receipts
- A gold purchase certificate
- Any other acceptable documentation proving the origin of the gold
4. Income Proof
Depending on the lender and your financial status, you may need to provide proof of income. This helps the lender determine your ability to repay the loan. Acceptable documents include:
- Salary slips for salaried employees
- Bank statements
- Income tax returns (ITR) for self-employed individuals
- Pension statements for pensioners
5. Bank Account Details
Most lenders transfer the loan amount to your bank account, so you’ll need to provide account details and a cancelled cheque or passbook copy for verification.
6. Passport-sized Photographs
You will typically need to submit two to three passport-sized photographs for the loan application.
7. Application Form
Most lenders will require you to fill out an application form with basic details such as your name, contact information, employment details, and the amount of loan you are seeking.
Steps in the Gold Loan Application Process
The application process is usually quick and straightforward.
- You can either visit a bank, NBFC, or a dedicated gold loan provider's branch, or apply online through their official website or app.
- After submitting your application, the lender evaluates the value of your pledged gold.
- The lender will offer a loan amount based on your gold’s value, usually up to 75% as per the LTV ratio, along with interest rate, tenure, and repayment details.
- The next step is the verification of all the documents you have submitted. This may take a few hours to a couple of days, depending on the lender’s process.
After verification and agreement, the loan is disbursed. It could be either instantly as cash or cheque, or directly to your bank account.
Gold Loan Repayment Options
Gold loan lenders offer flexible repayment options. These include:
- EMI Repayments: Monthly instalments of principal and interest.
- Bullet Repayment: Repaying the full loan amount along with interest at the end of the tenure.
- Overdraft Facility: Borrowers can withdraw money as per their requirements from the sanctioned loan amount and pay interest only on the amount utilised.
Conclusion
Financial marketplaces like Bajaj Markets make it easier to compare lenders, interest rates, and loan features in one place. By meeting the basic eligibility criteria and submitting the required documents, you can secure a loan against your gold efficiently. Be sure to choose a repayment plan that suits your budget and financial goals.
