If you carry gold ornaments or coins, a loan against gold is the best option to overcome a temporary financial crunch. A gold loan is known for its convenience, quick disbursal, low-interest rate and easy documentation. Gold finance companies do not ask you for a high CIBIL score or produce your income-proof documents for gold loans. While eligibility criteria for a gold loan are easy to meet, they may vary across financing companies.
You should know the eligibility factors and how they impact gold loans. Here are the primary eligibility factors that a lender considers while proposing you a gold loan and their importance.
Eligibility Criteria for Gold Loan: Primary Factors and Their Importance
1. The Element of Gold Purity
Financing companies accept gold as collateral against a gold loan in different physical forms. The gold purity should be between 18-24 karats. After in-house gold evaluation, the lender provides you funds. The better the fineness of your gold, the higher the loan amount it can offer you. You should also look at the studded gems in your gold jewellery as their value gets deducted from the gold value during gold evaluation by the lender. Gold coins are generally in the pure form with 99.99 fineness. Therefore, you can get a higher gold loan amount against them.
2. The Age Factor
Whether you are a young person or retiree, you must have invested in gold with a thought of financial security, or you may have received inherited gold jewellery. To avail of a gold loan, you should be aged a minimum of 21 years old when applying for a gold loan and a maximum of 65 years at the time of loan closure. Otherwise, you may not be eligible for a gold loan.
3. Income Factor
Though lenders do not ask for the applicant’s income proof, the applicant should be a salaried person, a self-employed person, a professional or a businessperson. Only having gold is not enough.
4. Interest Rate and Gold Loan Scheme
You can find various gold schemes for which you are eligible, depending on the quality and quantity of gold to be pledged. You can use the gold loan calculator to know your eligibility for different schemes. Knowing the eligibility criteria for gold loans under different schemes allows you to choose the best scheme at an affordable interest rate. Otherwise, you may pick a random gold scheme at a high-interest rate.
It is recommended that you check your eligibility for a gold loan before applying for it.
- You can make an informed decision after checking your eligibility for a gold loan as you know how much loan amount your lender can offer you based on your gold purity.
- You can choose a comfortable EMI option and repayment tenure available under different gold loan schemes.
Thus, it would be best if you check eligibility criteria for a gold loan beforehand to use your spare gold at best and get most of it with reputed gold financing companies.
Determine your gold loan eligibility, and get ready with your gold, valid identity proof and address proof to get funds quickly at an affordable interest rate of as low as 6.90% per annum.