Gold enjoys a high significance in India. People use it for ornaments, jewelry, and even in the form of coins and biscuits. It is also used heavily in auspicious ceremonies and sculpting of idols, etc. All these have made Indians keep a certain amount of Gold with them so that it can be used at times to gift someone or to mold it into an alluring jewel. Besides all these traditional usages, Gold can also be used to avail loans and with the fact that it is much value and readily available with most of the Indian families, the country has witnessed outgrowth of a number of financial institutions extending gold loans.
What are the perks of availing a gold loan?
Apart from ornamental purposes, Gold is something kept in the house for any future monetary emergencies. This means, even it is kept as collateral with the lender, it will not affect the borrower anyhow for the loan tenure. Hence, gold loans have an almost negligible risk factor.
In aggregate, the value of Gold has in its most part, always been appreciated and increments more than the average inflation. As a result, keeping Gold as collateral can also be taken as keeping it safe for the future price hike. Who knows, you can end up in recovering the entire net interest of the gold loan from the value appreciated after the completion of the amortization period.
In the case of secured loans, it becomes extremely difficult for the borrower to secure a new house (considering the demand) or to buy back the collateral that was auctioned for defaulting the loan. This is not the case with gold loans because Gold is not something unique like an ancestral property. Gold can easily be purchased from banks, post offices, and jewelry shops.
The amount sanctioned in gold loans can be up to 75% of the value of the Gold kept as collateral. With more funds, the borrower can finance various monetary needs.
The interest rate in gold loans is also highly flexible, which varies from lender to lender and also depends upon the terms and conditions.
Gold loans also offer flexibility in terms of usage. The borrower can use it for any requirements as per his needs. It comes with the same degree of flexibility as one gets in a loan against property and a personal loan.
Having understood the benefits of gold loans, let us proceed to know what documents are required to avail it.
Documents required to avail a gold loan
Identification proof (any one)
Aadhaar Card
PAN Card
Passport
Voter’s ID Card
Driving License
Age proof (any one)What are the Documents Required For Gold Loan
Aadhaar Card
PAN Card
Passport
Birth Certificate
10th Class Marksheet
Driving License
Residential proof (any one)
Bank Passbook
Voter’s ID
Ration Card
Aadhar Card
Electricity/Gas bill
(Note: KYC verification is mandatory)
These are basic documents required for availing of a gold loan. However, you must confirm the specific documentation with the lender before applying for a gold loan. It is expected that in the near future the banks would be allowed to lend against Gold other than jewelry such as bars or coins. As per the apex banking institution of the nation, RBI, the lending services are also going to be much transparent in the coming times.
