Instant Gold Loan Complete Guide

1. Introduction

• What is an instant gold loan?

A gold loan in India is a type of collateral-backed loan, where the borrower pledges their gold asset to the lender in order to avail a loan. The commercials for the loan remain largely similar to a standard loan offering, with only the difference being that the borrower gives their gold to the lender, and once the loan is repaid in full, including the principal, interest component, and any applicable charges, the gold as collateral is given back to the borrower.

• Why is it popular for quick cash needs

A gold loan is a popular financial instrument for people who have a quick cash requirement. Unlike other forms of loans, gold loans require minimal paperwork, offer quick assessment, and faster approval and disbursement. If you’re availing a gold loan from a reliable lender with a solid offering like indiagold, then you can get instant loan or the much-needed funds in a matter of minutes!

2. How Instant Gold Loans Work

• Basic process: Gold loans are pretty straightforward from a process point of view. The borrower takes the gold for assessment to the lender. Once the lender assesses the gold, they give the quote of the maximum loan that can be availed against the said gold collateral, and explain the associated charges and interest rates to the borrower. Once the borrower understands the terms and conditions, they give the possession of the gold ot the lender and the lender, in return, gives the money to the borrower as a loan against gold jewellery.

• Quick valuation and minimal documents: A Gold loan is a very convenient form of loan for many. One of the biggest reasons for that is the fact that the assessment and the loan application are fairly quick and straightforward. The lender assesses the gold collateral and arrives at the valuation of the collateral by assessing factors such as the purity and weight of the gold collateral, in conjunction with factors such as the prevalent gold rate, interest rates, and the loan-to-value policy of the lender.

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3. Key Features

• Fast approval/disbursal: One of the key features of gold loans is the speed at which one can avail a loan. The loan offers fast approval and quick disbursal to the borrower, thus enhancing the overall customer experience with gold loans. Lenders like indiagold offer one of the fastest assessments and instant disbursals in the gold loan market.

• Online or branch application: Many lenders offer applications at their branches; however, many new-age lenders like indiagold offer online gold loan applications, which adds to the convenience of borrowers and enhances the overall experience.

• Flexible repayment options: Lenders offer multiple flexible repayment options with their marquee gold loan offering, such as EMI option, bullet payment, and many others..

4. Eligibility & Documents

• Age and gold purity requirements: Lenders may put forth various eligibility requirements with respect to the age of the applicant, and other requirements more focused on the quality of the collateral, such as the purity of the gold, its weight, and LTV capping.

• Simple KYC documents needed: To avail a gold loan, the borrower would need simple KYC documents such as identity and age proof, address proof, and a PAN card. However, some lenders may have lender-specific requirements. It is prudent to seek clarity on the requirements from the lender that you wish to avail a gold loan from.

5. Gold Valuation & LTV

• How gold is assessed: Gold is assessed on various parameters, such as the weight and purity of the gold. Market price of gold, and the lender’s LTV policy. It is important to note that only the net weight of the gold is accounted for during the assessment process, as any weight associated with decorative items such as stones is not accounted for.

• How LTV determines the loan amount: The LTV (Loan-to-value) ratio is the percentage function of the loan amount against the value of the collateral. LTV essentially influences the maximum loan amount that can be availed against the said gold collateral. A higher LTV ratio means high loan amount and vice versa.

6. Interest Rates & Charges

• Typical interest structure: Different lenders have different interest rate structures on their gold loans. It is prudent to check with the lender on their offering and compare lenders based on the interest rates offered by them to choose the best deal for yourself. Lenders like indiagold offer one of the lowest interest rates in the gold loan space.

• Common fees to expect: Lenders charge fees such as application or file fees, interest rates, and prepayment fees. Having a clear understanding of the possible and applicable fees is really important as it impacts the cost of the loan for the borrower.

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7. Safety of Gold

• Storage, insurance, and security: The Safety of gold is paramount, especially because you, as a borrower, are giving the custody of your gold to the lender. It is important to choose lenders who undertake strict safety measures for the collateral. Lender like indiagold ensures that the gold is safely kept in secure bank vaults, and the gold collateral is backed by insurance.

• What happens in the case of default: In the event of default by the borrower, the lender reserves the right to auction off the gold to recover the dues. However, it is important to note that the lenders give sufficient time and notice to the borrowers to make the payment to avoid the gold auction. It si only after repeated reminders by the lenders do the lenders move ahead with the auction process and write off the loan.

8. Pros & Cons

• Main benefits: Gold loans offer several benefits, such as an easy and quick application process, quick disbursal, and low minimum requirements.

• Key risks to consider: One of the key risks associated with gold loans is the potential loss of gold. This happens in an event where the borrower defaults on the loan, and to recover their dues, the lenders have no option but to auction off the gold collateral. Hence, it is extremely important to borrow responsibly and repay the gold loan on time to avoid such precarious situations.

9. How to Choose the Right Lender

• Compare gold loan rates, LTV, charges, and safety measures: If you’re planning to avail a gold loan, then it becomes extremely important to choose the right lender whose offering is more suitable to you on various parameters. You can choose the best-suited lender based on parameters such as the gold loan interest rates offered, convenient loan repayment options, the loan-to-value ratio, the charge schedule, and the safety measures put in place to safeguard your gold collateral. Lenders like indiagold fare really well on these parameters and are an extremely good option for the first time as well as an old gold loan borrower due to their attractive low interest gold loan offering with customer-centric features.

Take a Pre Approved Gold Loan

Gold Loan starting @ undefined% per month*

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You will receive a call from our Relationship Manager