Consumers in possession of gold can consider leveraging its value to avail of high-value financing. It is a quick funding medium that provides access to a lump sum amount without undertaking any complicated application process. Instead, representatives of the lending institution conduct a simple verification of the quality of gold before proceeding to sanction the loan amount.
While the set LTV ratio for gold depends on a financial institution, the RBI has set the bar as high as 90%. Also, easy access to such funding mediums reduces the financial strain during medical emergencies, business expansions, etc.
Borrowers can also enjoy tax benefits on gold loans if the credit is used to finance a home improvement, property purchase, business needs, etc. Therefore, before applying for a gold loan, you will need to acquire proper knowledge on this financing option and its importance to optimise benefits.
What are gold loans, and why are they important?
Gold prices skyrocket exponentially, causing the value of this asset to keep rising. This is one reason why many Indian families invest in gold as a dependable source for equity in times of emergencies.
The importance of gold loan as a financing solution can be given as follows:
- Fast processing: The foremost reason to apply for a gold loan is its fast processing. Application for a gold loan involves duly filling up the application form, submitting a few documents, and valuation. Representatives of the lending institutions verify the gold’s purity and the market value before sanctioning the loan amount per the LTV ratio. Documents required to avail of the advance only involve basic KYC papers.
- Lower interest rates: A loan against gold is usually accompanied by a low-interest rate that doesn’t create a financial strain. It is a secured funding medium that involves flexible repayments within a set tenor. It makes repayment of the entire amount easier, reducing the financial burden and preventing debt accumulation.
- Zero hidden charges: Many NBFCs like Bajaj Finserv do not impose any hidden charges on the loan amount applied. Many institutions charge a minimal processing fee against gold loans.
- Credit history is unnecessary: An individual’s credit history doesn’t impact his/her gold loan approval when applying for the credits. This is a secured financing medium that required pledging gold as collateral. Therefore, any individual with a poor credit history or a low CIBIL score can apply without hassle.
These benefits highlight the importance of gold loans when it comes to availing high-value financing to meet variegated requirements.
How to apply for a gold loan?
Applying for a gold loan involves following these below-mentioned steps:
1st : To apply for a gold loan online, visit any financial institution’s website and click on products.
2nd : Click on ‘gold loan’ and proceed to ‘apply now.
3rd : Fill in the application form and submit it.
You can also apply offline. For this, visit your chosen lender’s nearest branch and accompany your gold deposit with the required documentation.
After receiving the application request, the lender will verify the documents and the purity of the gold deposited. The financial institution will sanction the loan amount as per the set LTV ratio within a few hours of application.
So, individuals planning to apply for a gold loan can access the loan amount within a few hours of applying, provided they comply with the eligibility requirements. By doing so, they can enjoy flexible repayment options and a host of other benefits.
It would be best for any borrower to speculate the market scenario and different financial institutions before choosing a particular lender for a gold loan.
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