Friday, 18 May 2018

What Are The Documents Needed For Gold Loan?

If you are looking for a fast and easy way to secure funds to meet your immediate financial needs gold loan is the answer. It is a loan that that requires you to pledge your gold ornaments with the lender in exchange of funds. Many people rely on gold loan for immediate short term needs like children’s education, marriage etc. It enables them to mobilize their assets that are lying idle in the locker to secure funds at a low rate of interest.
Some of the benefits of gold loan over other kind of loans are as follows:
·         A secured loan where the gold ornaments serve as collateral reduces the risk of the lender. The lender can always sell the gold and realize the dues in case of non-payment by the borrower. Hence the gold loan interest rate is much lower than other kinds of loans. For most personal loans the interest varies between 15-25%. But gold loan interest rate ranges between 12-16%.

·         Most banks do not check your income level. So even if you are unemployed you can rely on gold loan to meet your cash requirements. For most other kind of loans, your income level is assessed to judge your repaying capacity. But in case of gold loan where the customer has pledged his valuable asset, the lender is not worried about the repayment ability.

·         Credit scores play an important role in most loans approval process, but not in case of gold loan. Since the loan is fully secure with the collateral, the lender is not at all worried about losing his money. Hence he does not bother to check the financial history of the borrower. So even if you have a low CIBIL score, you can use gold loan to meet your cash requirements.

·         Most banks like ICICI bank, HDFC, SBI, Manappuram Finance, Muthoot Finance offer these loans. Most of these financial institutions do not charge a prepayment penalty.

·         The loan amount can be used for any type of expense. So it gives you the flexibility of use.

·         Easy documentation, less processing time and fast disbursal of funds makes this loan very attractive.

Let’s see what documents are needed to get a gold loan
Unlike other kind of loans, where the paper work is an important part of approval process, gold loans sanctioning doesn’t require you to submit many documents. All the bank needs are simple KYC documents for Identity proof and Address proof along with 2 passport size photographs. Yes, it is as simple as that. For identity proof one can submit copies of passport, driving license, Voter Id card, ration card, Aadhaar Card, ration card etc. For an address proof you can show you electricity or telephone bill or any other utility bill. Besides this you need to submit a signed application form and a signature proof. The bank will verify the purity of the gold and give you an approval. It’s an easy and hassle free process and you get quick approval.
Things to consider before taking a gold loan
·         These loans have a shorter tenure. Be sure of your repayment capacity else you risk losing your valuable asset. A little delay in payment may result in charging extra interest. But non-payment of dues, even after a formal notice is sent to you may lead to the lender auctioning the gold to recover the due amount.

·         The repayment patterns will affect your credit score as well. Make on time payments to ensure a spotless credit profile.

·         The amount of loan that you can get sanctioned is usually 80% of the value of gold pledged.

·         Gold loan interest rate varies from lender to lender. Compare the different offers of banks and private lenders to strike the best deal.

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