Several lucrative features, like low gold loan interest rates, flexible repayment terms, etc. make gold loans a viable option for borrowers looking to get funding during a financial crisis.
In this article, we are going to explore the maximum tenure for gold loan, its eligibility criteria and other aspects related to this credit instrument.
Maximum tenure for gold loan
Usually, the repayment tenure for gold loans tends to vary from lender to lender. While the minimum repayment tenure starts at 6 months, several leading financial institutions extend the repayment tenure to 12 months. This provides enough flexibility for repayment based on an applicant’s financial standing.
Willing borrowers must note that repayment tenure plays a vital role in deciding the interest rates which further determines the monthly instalments and total interest outgo. Hence, one must be extra careful while choosing the repayment tenure and opt for a tenure that best suits their requirements.
Eligibility criteria for availing a loan against gold in India
The simple and easy to fulfil eligibility criteria for gold loan make this credit instrument popular among intending borrowers. Any candidate (salaried, self-employed, farmer or merchant), irrespective of their occupation can opt for a gold loan if they possess high-purity gold ornaments.
However, one must be between 21 to 70 years of age in order to avail of a gold loan and get the best deals, such as low gold loan interest rates, flexible repayment options, etc.
In this regard, one must note that financial institutions accept only gold ornaments with a purity of 22 karats or more. Applicants cannot pledge gold bars or coins as collateral to get the loan.
Documents required for a loan against gold
Any intending borrower has to provide the KYC documents to get his/her gold loan application approved. Following are the basic documents that a financial institution requires before sanctioning a gold loan application:
- 1. Identity proof
- PAN card
- Aadhaar card
- Passport
- Driving license
- Voter ID card
- Photo identity card issued by the Central or State government
- Defence ID card
- 2. Address proof
- Aadhaar card
- Bank account statement
- Ration card
- Voter ID card
- Passport
- Utility bills, such as telephone or electricity bill
- Letter from any authorised person
In addition to the documents mentioned above, financial institutions may request proof of income to assess the repayment capability of an applicant.
Steps to opt for a gold loan in India
Prospective borrowers can follow these steps in order to apply for a gold loan in India:
Step 1: Visit the official portal of your preferred lending institution.
Step 2: Locate the gold loan page and click on “Apply Now” button.
Step 3: Following this, an online application form will show up on your screen.
Step 4: Fill up this application page with all the details and enter the loan amount that you wish to borrow.
Step 5: Provide your PAN details, 10-digit mobile number, email id and area pin code and click on “Submit Details”.
Once the lender accepts the gold loan application, a representative from the lending institution will get in touch with the customer and guide them through the next steps.
What are the main benefits of gold loans?
Those who wish to apply for a gold loan must also know the beneficial aspects of this secured credit instrument:
- Low interest rates
Due to gold loans’ secured nature and high market value of gold, the lending risk of a financial institution decreases considerably. Consequently, lenders offer a low interest rate on this credit facility.
- Flexible repayment options
Gold loan applicants have the option to choose the repayment term as per their financial capability. For instance, one can opt for paying just the interest amount and the total principal after the end of the tenure.
- No stringent credit score assessment
As gold loans are backed by collateral, lenders do not do strict credit score checks before sanctioning a loan. Hence, gold loans can be one of the best options for those with poor credit scores.
To sum it up, lenders usually offer a fixed tenure for gold loans (for up to 12 months). The willing applicants must choose this tenure wisely as it determines the affordability of a gold loan. In this regard, one can use a gold loan calculator to assess their monthly instalments and choose the tenure as per the results displayed.
