Advantageous Features of Gold Loans You Must Know
Gold is among the most important assets in almost every Indian household. It carries a high degree of emotional and monetary value. For generations, it has been an asset people depend on when they require immediate liquidity for personal or business purposes. However, rather than liquidating a piece of jewellery you love or a family heirloom during financial emergencies, it would be prudent to pledge it for a loan.
According to research, India’s gold production value crossed INR 7.4 billion in 2024. This highlights the sheer popularity of the precious metal. Gold is a secure asset with easy liquidity. Many banks and non-banking financial companies (NBFCs) offer easily accessible gold loans. The gold loan rate of interest is typically lower than personal loans, credit cards, and several other financing solutions. It is also among the fastest and most hassle-free options for immediate financing. Whether you need money for personal or business reasons, availing of a gold loan would be a good idea.
High Loan Amount
Gold loans offer a favourable high loan-to-value (LTV) ratio. Hence, you can borrow a significant portion of the gold’s assessed value. Typically, you are likely to get up to 75% of the value of your gold as a loan. The purity of the gold also plays a pivotal role in determining the sum of money you are eligible to borrow.
It is important to note that you can only get a loan against gold that is 18 Karats or above. If you pledge gold of higher purity, you can borrow a substantial sum from the lender.
Competitive Interest Rate
As you apply for a loan against gold, the asset shall act as collateral, which the lender may even take over in case you fail to repay the borrowed amount. Hence, gold loans are low-risk credit. Considering this, borrowers may get one at a low interest rate. In fact, the gold loan rate of interest is generally lower than several financing options like personal loans, home loans, and more. The low interest rate shall help you save money on EMIs and manage your funds efficiently.
Minimal Documentation
The approval process for a gold loan largely focuses on assessing the quality and value of the gold asset provided as collateral. Lenders perform a range of quality checks to ensure the gold asset provided by the borrowers meets the required standards. However, you do not have to submit extensive documentation for the approval of gold loans, which makes processing and disbursal of the loan much easier. Documents required for gold loans usually do not include income or employment proof documents. Only KYC documents have to be submitted with the gold loan application.
You may have to submit any of the following as identity proof, including:
- PAN card
- Voter’s ID
- Driver’s license
- Aadhar card
- Passport
- Any identity card issued by a PSU, nationalised bank or government authority that contains the photograph of the borrower can also act as identity proof.
You may have to submit any of the following as address proof:
- Ration card
- Bank account statement
- Copy of bank passbook with photograph
- Lease agreement of local address
- Utility bills like electricity, phone, gas, or water bills
- Any identity card issued by a PSU, nationalised bank or government authority that contains the address of the borrower can also act as identity proof.
After the KYC documents are efficiently processed and verified by the lender, the loan is generally disbursed fast.
Secure Gold Custody
The gold you pledge as collateral is stored securely by the lender till you repay the borrowed sum of money in full along with interest. The lender ensures the safety of your gold asset during the loan period. In fact, keeping the gold with a reputed bank or NBFC shall be safer than keeping it at home, as most prominent financial institutions have high-end security systems in place. Therefore, you would have peace of mind knowing your gold is safe.
Gold loans are among the most dependable and versatile financial solutions today. They help you meet your short term financial needs without losing the appreciation of the value of gold. Most gold loans have affordable rates of interest. Require minimal eligibility, and provide high loan-to-value ratios. It is best to choose a trusted gold loan provider to reap these benefits and have a hassle-free experience.
