Gold is a precious metal in India that symbolises prosperity, security and stability. Families often use it for festivals or celebrations. However, it also comes in handy when you need urgent funds.
For instance, many people prefer to apply for gold loans in India because of the various advantages they offer.
Top Reasons For The Popularity of Gold Loans in IndiaÂ
Minimal Documentation
Unlike personal loans or other types of loans, gold-backed loans require minimal documentation. This means you only need a handful of the required documents to proceed with your loan application.
For instance, reputed NBFCs such as Manappuram Finance require specific documents to disburse gold loans, including completed application forms, 1 address proof, 1 residence proof and a bank statement.
The bank statement helps them deposit funds directly into your bank account after approval.
Competitive Interest RatesÂ
Borrowers generally secure lower or competitive interest rates when applying for gold loans in India. These rates vary depending on factors such as the current gold price, the gold’s purity, and the LTV ratio.
For instance, some reputable lenders offer competitive rates as low as 9.90%, which reduces borrowers’ financial strain. The low rate also helps them plan their monthly budget without stress.
Multiple SchemesÂ
Many borrowers appreciate the various gold loan schemes offered by leading NBFCs.
That is because they can explore and choose the option that best suits their needs. For instance, some reputed NBFCs offer schemes with loan limits ranging from Rs 10,000 to Rs 50,00,000.
Their interest rates vary from 9.90% to 11.99% and more. So small businesses may opt for the Rs 10,000 loans. On the other hand, families hosting a wedding may opt for the Rs 50,00,000 loan.
Physical or Online Loan Application FlexibilityÂ
While most lenders offer physical gold-backed loan disbursement, some NBFCs, such as Manappuram Finance, also offer online facilities. As part of this facility, you can apply for loans up to Rs 1.5 crore through the mobile application after getting your gold evaluated in person.
The quick, paperless transaction helps you save time.
Instant DisbursalÂ
The quick disbursal of funds is yet another reason many people prefer gold loans in India. The speed of disbursement, of course, depends on factors such as the availability of the correct documents, verification and finalisation of the loan agreement.
Having the correct documents speeds up the process, as the lender can quickly verify your identity and the documents’ authenticity. If you carry all these documents, the amount will be credited to your bank account instantly upon verification.
Easy Repayment Options
The ability to repay their loans in various ways is also why borrowers enjoy applying for gold loans. For instance, you may opt for EMIs-only, interest-only EMIs, partial payments or bullet payment.
EMI-only payments involve paying both the principal and interest, while interest-only EMIs involve paying only the interest. Furthermore, under the interest-only EMI repayment type, you pay the principal amount at the end of the tenure.
Partial payments involve paying portions of the principal or interest at your convenience throughout the loan tenure. A bullet payment is a payment of the principal and interest in a single lump sum at the end of the term.
You should carefully consider each repayment option and then choose the one that suits your needs.
How To Apply For A Gold Loan?Â
Visit Your Nearest NBFC BranchÂ
Visit your nearest NBFC branch to start the process. Before you step out, you might want to carry your gold in a pouch or bag, and your documents in a folder. Alternatively, you can apply online if your chosen lender offers this facility.
Get Your Gold ValuedÂ
Once you apply, the lender first evaluates the value of your gold.
Receive Loan Offer
Once the lenders determine the purity, market price and quantity of the gold, they will inform you how much you can borrow. This amount will depend on the LTV (loan-to-value) ratio, which is up to 85% for small-ticket loans (under Rs 2.5 lakh), 80% for mid-range loans (between Rs 2.5 lakh and Rs 5 lakh) and 75% for loans above Rs 5 lakh.
Submit and Verify Documents
You may submit the required documents, including the completed application form, once you have determined your loan amount.
Sign the Loan Agreement
After the lenders verify your documents, you will have to sign a loan disbursal agreement to formalise the disbursement.
Receive Gold LoanÂ
Finally, the lender disburses the required loan amount. They may do so by sending the amount to your account or paying you in cash. Your gold will then remain with the lender in secure vaults until the lender receives full repayment.
Conclusion
Applying for gold loans in India allows borrowers to enjoy flexible financing for their various needs. Moreover, as gold loans are secured by collateral, they also offer borrowers peace of mind.
Furthermore, their instant disbursement speed helps borrowers meet their needs quickly, without any delays. Visit an NBFC near you to fill out your application form and kick-start the process.
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