A Complete Guide About Gold Loan Process and Eligibility

What is a Gold Loan?

A gold loan is a type of secured loan where the borrower pledges their gold possessions as collateral to a lender. Gold loans have emerged as a popular option amongst individuals in the country, who want to unlock the value of their gold jewellery or ornaments to meet their immediate financial needs. The gold loan process in India provides a convenient and accessible way for individuals to access funds quickly, often without the need for extensive documentation. This type of loan is beneficial for those seeking a quick way to obtain funds for financial emergencies.

The gold loan process is seamless and owing to the collateral-based approach, both parties are safeguarded from the risks involved. The borrower does not have to worry about credit score and for the lender, the value of gold serves as security against the loan amount. It is the easiest way to fulfil your financial needs and proves to be a sensible alternative to availing loans from banks or NBFCs. Our instant Gold loan@home service allows you to get a gold loan in the comfort of your home in 3 easy steps - request a gold loan, get the gold valued at home, and get money instantly in your bank account.

Suggested Read: A BEGINNER’S GUIDE TO GOLD LOANS IN INDIA

What is the Gold Loan Process?

A gold loan process that includes 3-4 easy steps of obtaining funds for emergency use. It is an easy and hassle-free way to meet a sudden financial requirement. Mentioned below are the steps involved: -

Step 1

The first step in taking a gold loan is to apply either to a bank or a non-banking financial company (NBFC). For this, you can go to the branch or lender’s office to apply in person, or you can apply online, as the convenience of digitisation has benefited everyone in several ways. You can also apply for home service, as most banks and NBFCs in this country offer.

Step 2

In this step, your gold loan eligibility amount will be evaluated. If you have opted for a home service, then a representative may get in touch with you and come to your home to examine your gold possessions. This is done to see whether the application meets the eligibility criteria or not.

Step 3

The third step is the documentation process. Lenders like banks or NBFCs follow the guidelines set by RBI to complete the KYC process. You need to be handy with the documents required for a gold loan. Documents that are mandatory for the gold loan procedure in India are as follows:

• PAN Card, AADHAR Card, Driving License, Passport, and so on that can be proof for photo identity information to avail gold loan.
• Address identity proofs like sales deed, rent agreement, utility bills, voter ID card, driving license, and so on.
• Passport-size photographs.

Point to Remember: Meeting the gold loan eligibility criteria is mandatory for availing a gold loan.

Step 4

The last step is the approval stage where the applicant needs to confirm the terms & conditions. Following the lender’s approval, the loan amount will then be credited to the borrower’s account. Processing fees for the loan amount may vary.

Suggested Read: HOW DOES THE GOLD LOAN PROCESS WORK?

What is the eligibility criteria for a gold loan?

Residents of India are eligible for taking gold loans. The applicants must also have:

• Gold jewellery or ornaments to pledge for the gold loan.
• Applicants must be above the age of 18.
• The value of your gold loan will be determined by the weight of the gold items you pledge, the current gold rate in the market, and the purity of the gold.

Point to Remember: It is a secured loan independent of credit scores.

Suggested Read: GOLD LOAN - KNOW ABOUT ELIGIBILITY, INTEREST RATES AND TENURE

Documents Required for Gold Loan Process

Photo Identity Proof

Any one of the following documents can be submitted:

• PAN Card
• Aadhaar Card
• Voter’s ID
• Driving Licence
• Valid Passport
• Ration Card
• Job Card from NREGA
• ID card Containing the Applicant’s Photograph, Issued by a Nationalised Bank, PSU, or Government Authority
• Proof of Address

Any one of the following documents can be submitted:

• Ration Card
• Copy of Bank Passbook Containing the Applicant’s Photograph
• Bank Account Statement
• Local Address Lease Agreement
• Utility Bills, Like Gas, Power, Water, etc.
• Documents Containing the Applicant’s Address, Issued by a Nationalised Bank, PSU, or Government Authority
• Passport-Sized Photographs
• Duly Filled Application Form

It is crucial to double-check and confirm the accuracy of the information entered in the loan application form.

• Loan Agreement

This is a legally binding document provided by the lender, which outlines all the terms and conditions of the loan, including the gold loan interest rate, loan amount, repayment period, etc.

• Receipts

Ask for all receipts, whether it is the gold loan processing fee payment, interest payment, principal payment, etc.

What are the features that make gold loans the best?

• The processing time on gold loans is often faster because the documents required for gold loan process are minimal.
• Unlike personal loans, gold loans charge lower interest rates. So you can answer all your financial worries with a high loan amount and low interest.
• In most cases, banks and NBFCs do not charge any kind of processing fees and even if they do, it is usually between 0.25 to 1% of the loan amount.
• Since gold loans are a form of secured loans, most lenders do not ask for any income proof or credit history.
• Financial flexibility is crucial for borrowers to manage their repayment obligations effectively. Gold loans offer various repayment options, including flexible repayment schedules and the choice of partial payments or full repayment at once.

Unlike unsecured loans where lenders rely solely on the borrower's creditworthiness, a gold loan offers a secured avenue for individuals to access funds, leveraging the inherent value of their gold holdings. While dynamic factors have a role to play in determining the price of your gold, there’s no denying that it is one of the safest ways to get a secured loan when the need arises.

Having the largest gold loan portfolio in India, Muthoot Finance offers a number of gold loans with a resolute focus on delivering the best services to them, and has been voted India’s No. 1 Most Trusted Brand 2023 for the 7th Year in a row by TRA’s Brand Trust Report.