In India, gold is among the most prized possessions of any individual or family. For centuries, gold has been purchased not merely in the form of ornaments but as an investment whose value is sure to appreciate over the years. There was a time when gold was used as currency and a standard to run the economy, and now we live in an era where it is not a commodity but a great part of a person’s worth. The value of gold has often appreciated even faster than stock markets and has been capable of outpacing the economy of some of the largest and most stable countries of the world.
When you require money on an urgent basis, there are several options that you can turn toward. People often look at taking out short-term loans or even selling off property to procure liquid assets. However, since gold is an asset whose value is bound to increase with time, not a lot of people prefer to sell gold to procure money. Rather, they prefer options to mortgage their gold for a specified amount of time in exchange for money and receive it back once repayment is complete. This option has many advantages, the greatest of which is that you retain possession of your gold at the end of the loan period. This is the reason gold loans have become immensely popular in recent times.
Securing Loans Against Gold
The procedure for getting a gold loan is typically really simple. The main requirements may be summarised as follows.
- Documentation: In comparison with any other type of loan, a gold loan probably requires the least amount of documentation. This is because there is not much more that you need to prove to get a gold loan than the possession of gold and your identity. You do not need to present your previous credit record, ensuring you can even get a gold loan with a low CIBIL score. To prove your identity, you can present any government-issued photo identity proof such as your Aadhaar Card, Voter ID, Driver’s License, PAN Card, or Passport. You will also need to present a proof of address, which may be any of these or a government bill. The only other document that you will require is the loan application form.
- Eligibility: The only rigid eligibility to get a gold loan is that you must be an adult. Apart from that, different financial institutions can have their own eligibility criteria, but these criteria are typically lax and flexible. You can take a pledged jewel loan in little to no time, and processing times for a gold loan can even be less than one day. You must prove your identity and residence to apply for a gold loan and submit all the required documents to the manager of the financial institution. The institution will assess the value of your gold, and the loan offered to you will be of a large fraction of this value. The entire value will not be offered as a loan since the price of gold fluctuates over time.
- Collateral: Now, we come to the most important part of procuring a gold loan. Depending on whom you ask, gold may or may not be considered collateral. You can apply for a gold loan without collateral or get offers on collateral gold loans in various banking and non-banking institutions. All you need to do is bring your gold with you. There are several different types of gold items that you can mortgage in exchange for money, which will be covered in the next section. Only the percentage of gold is considered to calculate the loan’s value that you are eligible for.
Types of Gold Items You Can Mortgage
There are several different types of gold items that you can mortgage to get a gold loan with a low rate of interest. Here are the three basic types.
- Gold Jewellery: Most Indian households own gold in the form of jewellery. This jewellery may have been passed down from generations or h bought in recent time during occasions such as marriages and other events. Gold jewellery is almost never made of pure gold and contains other metals in the form of an alloy. This is because gold is a soft metal. Gold jewellery often has diamonds and other gems studded into it, and pure gold cannot hold these gems firmly. Your gold loan provider will generally have a lower cutoff of 18 carat gold to make your jewellery eligible for taking a loan. The higher limit may also be set at 22 carats.
- Gold Coins and Bars: Gold coins and bars are typically bought purely as an investment due to the inevitability of their values increasing over time. In certain religious ceremonies as well, gold coins might need to be bought as an offering. These are custom made by jewellers, and owners store them in bank lockers and other safe spaces. With respect to gold coins and bars, the policies of loan granting institutions can vary widely. Certain institutions will offer loans only against pure, 24 carat gold coins and bars, while others will allow any item above 18 carat purity.
- Digital Gold: Over the past years, digital gold has also become a popular form of investment in gold. You can digitally ask a company to purchase gold on your behalf and store it safely. You do not need to visit a jewellery store or a goldsmith, but rather the financial company assigns a part of its gold reserves to you. If you want to avail of a loan against digital gold, you will first need to convert it into physical gold. You can ask the company that assigned you the gold to ship the required physical amount to you. Do keep in mind that there will be making charges to convert digital gold to gold coins or bars.
Shriram City Gold Loans
If you are looking to get a gold loan with a low CIBIL score or a gold loan with a low interest rate, Shriram City has what you need. Shriram City offers a wide range of offers on pledged jewel loan, and peripheral costs are reduced to a minimum. Shriram City offers you some of the highest gold rates per gram and provides as much as 75% of the value of your gold as a loan. After you have availed of the loan, your gold remains secure until repayment, and your are even offered insurance for it.
If you are looking for a gold loan, Shriram City is the way to go!
Taking a loan against gold provides you with a secure method of procuring liquid assets if they are required urgently. Several banking and non banking institutions have now begun to offer gold loans, and these loans are available at low interest rates and without any requirement of a CIBIL score at institutions such as Shriram City.