Personal Loan

Complete Guide On How To Apply For Gold Loan In Emergency


Usually, when you need a loan, you either look to your friends and family to borrow money or take a personal loan. To get a loan, you need to have an existing connection with the bank or a high credit score. Otherwise, you will have to deal with high interest rates, extensive paperwork, and delayed loan disbursements. 

Gold loans, on the other hand, are a more accessible and straightforward option. This will not strain your bank accountOnly a few people know that you can use the gold ornaments or coins in your house to avail yourself of some of the best gold loans available.

Now what are gold loans, and how is it practical to take a gold loan during a time of financial emergency? Keep reading the article to get a detailed understanding of gold loans in emergencies.

What are gold loans?

  • These loans are secured because gold is used as collateral between the borrower and the lender. The lender keeps the gold during the loan period. In this way, you are ready to secure the loan by giving up possession of your gold.
  • This type of loan can be a convenient solution to ensuring liquidity for several financial expenses. It can be an immediate personal emergency or a professional expense.
  • gold loan is also a great option for credit-impaired individuals, i.e., people who have low credit scores. Additionally, it is among the quickest loans to be disbursed. It has relatively lower interest rates because of the collateral. It can be obtained in a few easy steps.

Why should you avail yourself of gold loans?

Here are some of the benefits of getting gold loans when you need money fast:

  • High-value Loan amount: The Reserve Bank of India has increased the LTV (loan-to-value) for gold loans from 75% to 90%. This means that for the same amount of gold, you can apply for more money. 
  • Low-Interest Loans: If you are worried about incurring huge interest, you will find relief in knowing that the best gold loans provide minimal interest rates. These rates are affordable and will not trouble you in the future. 
  • Flexible Repayment Tenures: Gold loans offer the most flexible repayment choices out of all the secured loans. The borrower is generally allowed to choose from any one of the following loan repayment options.
  1. No EMI is required, you can directly pay the loan at the end of the term. The best gold loans offer flexible repayment terms of up to 48 months. 
  2. You can pay a portion of the principal and interest each month.
  3. There is also an overdraft feature that lets you take money out whenever you need it in case of an emergency. Interest will be charged only on the withdrawn amount. You can pay the principal amount at the end of the term and pay the interest monthly.
  4. Flexible repayment options without foreclosure charges, for example:a. Regular loan payment: Here the EMI accounts for a certain portion of the principal and interest.b. Paying interest regularly and clearing the principal at the end of the tenurec. Bullet payment option: With this, you can pay off both principal and interest at the end of the term.d. Every repayment option has its own financial implications. You are free to choose after assessing all the options.
  5. Faster and safer processing of loans

Gold loans have a very simple and easy-to-follow procedure. They do not have a complicated documentation process. 

  • Instant disbursal of funds: A huge advantage of having gold loans is that you can get access to your funds instantly whenever there is an emergency.

How can you get a gold loan?

Gold loans are risk-free for lenders. They have very simple procedures. The process avoids cumbersome paperwork and tedious documentation. The eligibility criteria are also very lenient.

  • Anyone with gold ornaments can apply for gold loans.
  • The credit score of the borrower is not significant in lending a gold loan.
  • The borrower’s income and employment status do not need to be accounted for.

To apply for a gold loan, you can follow the below steps:

  • Firstly, you need to visit your bank branch along with your gold, KYC documents, and residential proof.
  • The bank evaluates the value of the gold and offers a certain amount of loan against it, depending on the LTV.
  • LTV (loan-to-value) refers to the amount of loan you can get in comparison to the value of your assets. A higher LTV is helpful in cases of financial emergencies or if you’re facing financial pressure and need money.

Are you eligible?

The best gold loans have lenient eligibility conditions that are simple and easy to fulfil.

  • Anyone within the age bracket of 21 to 65 years of age can apply.
  • The gold should be owned either by the individual or their family members.
  • The bank will also think about other important things, like your credit card report and whether or not you qualify based on its standards.
  • However, keep in mind that gold loans cannot be used for risky endeavours like investing in the stock market or buying real estate.

Final Thoughts

Hopefully, you’ve gotten to know more about gold loans and their benefits in this article. Financial emergencies are almost always unpredictable. It is important to have a pillar that can support you during your time of need. Gold loans are the most dependable way to manage and withdraw your funds as needed. They are also easy to apply for.

If you want to know more about gold loans and gold loan transfers, you can consult financial experts like Piramal Finances. They provide efficient guidance and solutions for the needy regarding financial matters.