The gold loan is a financial service in which a loan against gold is given where gold is pledged by the borrower with the lender and the amount is sanctioned by the lender after verifying the quality of the gold. One of the biggest advantages of the gold loan is the ease of availability. Lenders are generally banks and financial institutions including NBFCs. The gold of the borrower is extremely safe with the lender. The lender makes sure of taking due care of the gold lying with them.
To avail of a Gold loan following eligibility criteria needs to be fulfilled-
The person applying for such a loan has to be a normal resident of India
The person must have completed his/her 18 years of age
He/she must have a self-owned house property in their name
He/she must have in their possession and ownership the Gold which they are pledging with the bank.
Following documents are also needed to be filed for applying to a Gold loan-
Identity proof such as Aadhar card/ Voter card/ Pan Card/ License
Residence proof such as Utility bill of house/ Adhaar card/ Voter ID/ License
There are several ways to repay your Gold Loan. Some of them are described below-
Bullet Repayment
Here, the applicant has to pay only the interest rate during the term period of the loan and the principal amount has to be paid at the end of the loan tenure. However, this option is provided to the customers who are availing of short-term loans. The interest rate is paid through EMI every month.
2. Overdraft Facility
This scheme is famous especially amongst the self-employed. In this scheme, a person in need of money can withdraw it anytime they want. With this difficult situation of the pandemic, this repayment facility becomes extremely helpful. Here, the applicant can choose the amount which they want to repay as interest from their total loan amount.
3. EMI Facility
In this facility, a fixed amount has to be paid each month to reduce the liability of the loan substantially. This is one of the most common ways nowadays not just in gold loans but in almost every significant purchase made. The customer gets the loan and an EMI is fixed which has to be paid each month.
The gold loan has many advantages but the most significant it has is on the CIBIL score of an individual. A person can improve their credit score with the help of a Jewelry Loan. Although there is no requirement for a good credit score to apply for a gold loan, a gold loan can improve the CIBIL score of the person applying for such a loan. A gold loan is a secured form of loan so banks are very less concerned about the CIBIL score of an individual. If a person makes a default in repayment of the loan amount, banks always have an option of selling the gold so pledged in the open market.
But with timely repayment of the gold loan amount an individual’s credit score improves which not only helps them in significantly raising their chances of getting not even gold loans but any sort of loans in the future.
With the advent of digitization, gold loan is available at the fingertips. A person willing to apply for a gold loan can do it online through the bank’s portal. Banks and other financial institutions offering the gold loan have made the process so simplified that now it is very easy to apply for a gold loan online. The customer has to only visit a bank branch once to submit the gold to the bank. Rest all the process can be done through an online platform. The loan amount gets disbursed very quickly within hours in the bank account of the person who applied for such a loan.
Conclusion
A gold loan is a very beneficial financial service that can help a person to overcome the financial crisis, repay their existing debts, incurring any other expenses, to improve their credit score.
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