How does a gold loan work?
A loan against gold is a unique credit option because of its working principle. Here is how gold loan works:
- Online application
To apply for a gold loan, you just need to fill out an online application form. You need to provide all the necessary details in the form and submit. Or if it suits you better, you can also visit the nearest gold loan branch to avail of the loan offline.
- Evaluation of gold
This is where the gold loan process is different from that of other financial products. After applying for credit, the gold pledged as collateral will be evaluated using the state-of-the-art karat metres to assess its purity and weight, considering the prevailing gold price. Based on this evaluation, we determine the exact loan amount that an individual is eligible for.
- RBI cap on LTV for gold loans
Here, you must note that RBI has capped the LTV ratio of a gold loan up to 75%. Lenders extend the loan amount to the applicant based on the evaluation and market price of pledged gold. Currently, Bajaj Finance only accepts gold jewellery worth 18 karats as a collateral against the loan. In this regard, you can use a gold loan calculator beforehand to assess repayment liability. This online tool displays accurate results within seconds and allows you to plan and manage your finances efficiently.
- Eligibility and documentation
The next step on how this credit facility works is the eligibility and documentation. Being a secured credit option, gold loans do not impose strict eligibility and documentation. However, you need to be an Indian citizen, aged between 21 and 70 years, to avail of this loan. You would also need to provide your basic KYC documents for gold loan and address proof to complete the verification process.
- Credit approval
After evaluating gold articles, documentation and signing of a loan agreement, the credit disbursal process begins. Finally, borrowers will receive their desired loan amount into their registered account. The entire gold loan process from application to disbursal takes a few hours to complete and ensures a hassle-free loaning procedure.
Who is eligible to apply for a gold loan?
To apply for a gold loan, you need to meet some basic eligibility conditions. Any Indian citizen between the ages of 21 and 70 years can apply. You must own gold jewellery that falls within the 18-22 karat range, as this will be pledged as security for the loan. Most lenders, including Bajaj Finance, do not ask for income proof or high credit score, making the loan easy to get for a broader section of the economy. You will need to get your gold jewellery and provide basic KYC documents for gold loan. Since the loan is secured against your gold, the approval process is usually quick. With us, your loan amount is often disbursed on the same day after verifying the gold’s purity and weight.
What is the interest rate on which lenders give the gold loan?
The interest rate on a gold loan depends on the lender, the loan amount, and the repayment terms. For Bajaj Finserv Gold Loan, the interest rate usually starts from as low as 9.50% to 24% per annum, but it can vary based on the gold’s purity, loan-to-value ratio, and repayment schedule chosen by the borrower.
Gold loans generally have lower interest rates compared to unsecured loans because your gold acts as security. Since lenders have the gold as collateral, they take less risk, which helps in offering better rates. With Bajaj Finance, you also get multiple repayment options, like paying interest regularly and the principal at the end of the tenure.
The rate offered may also depend on the gold weight and market value during evaluation. To know the exact rate applicable to your requirement, you can check your gold loan eligibility online or visit the nearest Bajaj Finserv Gold Loan branch.
What type of gold jewellery can you submit as collateral?
Irrespective of your employment status, you can qualify for this credit if you possess gold jewellery to obtain funds against it.
However, one must note that this credit facility is available only against pure and fine gold jewellery. Therefore, gold bars and coins will not be accepted as collateral for disbursing the loan amount.
With Bajaj Finserv Gold Loan, you get the benefit of flexible repayment options. In this case, you can pay the interest either monthly or quarterly and repay the principal and pending interest, if any, at the time of loan maturity.
Thus, the demand for this credit has significantly increased due to a hassle-free gold loan process and exclusive features. This trend will continue as gold prices are higher, allowing borrowers to avail themselves of a sizeable amount to meet varied requirements.
