Pros and Cons of a Gold Loan and How to Apply for It

The existence of gold loan companies has enabled borrowers to mortgage gold and receive funds against it. Several Indians search for “gold loan near me” to receive funds for urgent financial requirements. But not everyone knows the procedure to apply for a gold loan. Jump into this article to understand how to apply for a gold loan and learn its pros and cons.

How to Apply for a Gold Loan

Applying for a gold loan is quite similar to a traditional one. You must find the lender offering the lowest gold loan interest rate and begin with the application procedure. The steps to apply for a gold loan are as follows:

Fill Out and Submit Your Application

You must fill out an application form to apply for a gold loan. You must enter basic info like your personal details and residential address. You should also put your signature on the form to show that you agree with the terms and conditions. Before submitting your application, check whether you have entered everything correctly.

Provide the Required Documents

If you are applying for a gold loan, you must provide your lender with certain documents to prove your address and identity. Lenders usually accept ID proof like an Aadhaar card, driving license, Voter’s ID, and PAN card. You can submit your passport, Voter’s ID, phone bill, or ration card as residential proof.

Hand Over the Gold

Next, you will have to hand over your gold to the lender. The lender will check the purity and weight of the gold. They will use a gold loan calculator to determine the maximum amount you can borrow against your ornaments. At this point, you must confirm whether you want to proceed with the gold loan processing.

Receive the Loan Amount

Once you confirm that you want to proceed with the loan processing, the amount will be disbursed to you in a few days. You will receive the loan amount in your bank account. The processing time of the loan will depend on the lender.

Benefits of a Gold Loan

Several people wonder why they should opt for a gold loan rather than a traditional loan. Check out the different advantages of gold loans that attract borrowers:

• Low Gold Loan Interest Rate:

  The massive competition between gold loan banks and companies has reduced gold loan interest rates and benefitted borrowers. You will come across several gold loans with remarkably low-interest rates in India. The attractive interest rates of gold loans will make you forget about personal and business loans for fulfilling financial requirements.

• Low Processing Fee:

  The exact processing fee charged on a gold loan differs according to the lender. But most lenders charge only a minimal processing fee depending on your borrowed amount.

• Minimal Documentation:

  Getting a gold loan requires minimal documentation. In fact, you don’t even have to submit your income proof to get a gold loan.

Disadvantages of a Gold Loan

A few disadvantages of gold loans are as follows:

• Weight and Purity:

  The gold loan approved amount will depend on the weight and purity of your gold. Moreover, the LTV a lender decides will also influence the amount you can borrow.

• Risk of Losing Your Ornament:

  If you fail to repay your gold loan, you will permanently lose your ornament.

Ending Note

Gold has been meeting financial requirements in Indian households for ages. Despite a few advantages, it remains one of the most reliable financial instruments in times of need. Moreover, the ease of applying for a gold loan makes it even more preferable among borrowers. So, find a reliable lender and apply for a gold loan today!