How to Avail a Gold Loan Online — A Step-by-Step Guide

Availing for a gold loan online with IIFL Finance is convenient and effortless. Learn how to avail a gold loan with our step-by-step guide and required documents

27 Mar,2024 09:16 IST 2048
How to Avail a Gold Loan — A Step-by-Step Guide

A gold loan is a secured loan. It is similar to a mortgage loan as the borrower keeps their gold as collateral with a lender and avails capital. 


Generally, a gold loan has a shorter term. In the case of a gold loan, the interest rate is lower compared to some other forms of loans. 


The interest rates on gold loan are currently in the 7.5%-12% range, depending on the lender, but this could change depending on the country’s monetary policy. Typically, banks charge lower interest rates compared to non-bank lenders. 

Life's unexpected financial challenges can be eased with a valuable resource often overlooked – your jewellery. Consider turning to a gold loan to navigate tight situations. This guide will help you understand and confidently access this financial option, transforming your valuable possession into a potential financial lifeline.

What is a gold loan?

A gold loan is when you use your jewellery as collateral to borrow money. The straightforward gold loan process requires minimal documentation, making it accessible to many. You can easily check your gold loan eligibility, as credit scores may not be a barrier. With your gold as security, this option provides a quick and hassle-free solution during financial challenges. Explore this guide to grasp the gold loan process, necessary documents, and eligibility criteria, ensuring a smooth experience in leveraging your precious possessions.

Why is a gold loan a better option than other types of loans?

Due to faster processing and lower interest rates, a gold loan is a preferred way to borrow money. The interest rate tends to be higher if the loan amount is larger. A regular and high income will allow the borrower to get a gold loan at a lower interest rate. 
Gold loans are granted against gold jewellery. The gold item is kept safe with the lender till the closure of the loan. 

Key steps to avail a gold loan

  1. Eligibility Check: Ensure you meet the basic criteria – 18+ years old (some lenders require 21+), Indian citizen, and proof of identity and address.
  2. Gold Valuation: Your gold's purity and current market value determine the loan amount. Most lenders offer gold loan-to-value (LTV) ratios of up to 75%, meaning you can borrow up to 75% of the gold's worth. Gold loan calculators online can give you a rough estimate, but a professional valuation at the lender's premises is crucial.
  3. Choose Your Interest Rate: Decide between fixed and floating rates. Fixed rates offer stability, while floating rates may be lower initially but fluctuate with market conditions. Weigh your risk appetite and financial goals before making this choice.
  4. Understand Fees and Charges: Don't get blinded by a seemingly attractive loan against gold rate. Ask upfront about processing fees, valuation charges, and storage costs to avoid hidden surprises.
  5. Read the Loan Agreement: This is your financial roadmap. Scrutinize the repayment terms, prepayment penalties, and default consequences. Don't hesitate to clarify any doubts with the lender.
  6. Repayment Options: Choose a plan that fits your budget. Early repayment can save you on interest, so consider using gold loan EMI calculators to strategize your payments.
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Why is a gold loan a better option than other types of loans?

A gold loan is often preferable due to its simplicity, quick processing, and minimal documentation. Let's explore the benefits of gold loans:

  • Minimal paperwork: Loan on gold requires minimal paperwork, often just basic identity and address proofs.
  • No credit score worries: Unlike personal loans, a bad credit score won't hold you back.
  • Quick access to cash: Gold loans offer speedy approvals and disbursals, often within the same day.
  • Flexible repayment options: Choose a repayment plan that suits your budget, with monthly, quarterly, or even lump sum options available.
  • Transparent process: Reputable lenders provide clear breakdowns of interest rates, fees, and loan terms, leaving no room for surprises.

What documents are required?

To secure a gold loan, you usually need essential documents like your Aadhaar card, PAN card, and proof of address for KYC (Know Your Customer) purposes. In some cases, lenders might request income proof, especially for larger loan amounts. These documents are crucial for a smooth and straightforward gold loan application process. Always ensure that your documents are clear, valid, and up-to-date to facilitate the approval process. It's advisable to check with the specific lender for any additional requirements they may have.

How is gold loan repayment done?

Repaying a gold loan is flexible and convenient. You have options such as monthly EMIs, quarterly installments, or a lump sum payment at the end of the loan tenure. Most lenders provide hassle-free online and offline payment channels, ensuring a seamless repayment experience. Choose the method that suits you best and easily fulfills your repayment obligations, making the process convenient and accessible for borrowers.

Who is eligible for a gold loan?

Any individual who has gold jewellery is eligible to apply. The applicant should be in the age group of 18 years to 60 years. Loan against gold is granted to professionals, self-employed, business owners, and other individuals.
Moreover, a poor credit score usually doesn’t matter as this is a secured loan. 

How is a gold loan repaid?

There are basically four ways to repay a gold loan:

Pay periodic EMI:

This includes payment of both the interest and principal amount on a monthly basis.

Pay EMI first and principal later:

Follow the EMI schedule to repay the interest amount and pay the full principal amount at the time of maturity. 

Partial payments:

Make partial or even complete payment of interest and principal amounts, irrespective of the EMI schedule. You can also repay the principal amount first and then pay the total interest. 

Bullet repayment:

Repay the principal and interest amount at the end of the loan’s tenure.  

Account closure

A gold loan account is deemed closed when the borrower deposits the outstanding loan principal amount and interest amount. The lender gives the collateral gold back to the borrower and receives the acknowledgment after the closure of the loan account is confirmed.

Conclusion

Apply for a gold loan at IIFL Finance to get competitive interest rates, transparent terms, and flexible repayment options, making your gold loan journey smooth and straightforward. Visit IIFL Finance’s website or branch today and turn your treasure into a timeline for a brighter financial future.

Remember, a gold loan is a helpful resource, but use it wisely. Research thoroughly, compare options, and choose a lender who cares about your financial well-being. Your gold can be a valuable financial ally when approached responsibly, helping you navigate unexpected challenges with confidence. Stay updated on the gold rate today to make informed decisions about using this tool effectively.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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