A gold loan is one of the quickest ways to fetch substantial liquidity from the lending market. The borrowed amount is free from any user restriction. So, individuals can use that capital to meet any purpose they aspire to. Nevertheless, a loan keeps individuals under financial burden till they repay all their dues.
So, borrowers should determine the exact credit amount to meet their immediate financial crisis. It will help them estimate the minimum gold required for a gold loan. Individuals must know how they can measure out this minimum requirement of gold.
Procedure to estimate minimum gold required for gold loan
Individuals can utilise a gold loan interest rate calculator available on most lenders’ websites to understand the minimum gold required to avail a certain credit amount. Here is the stepwise guideline following which individuals can measure this:
Step 1: Access the gold loan EMI calculator from the official website of a lending institution
Step 2: mention the loan amount you need in the respective box.
Step 3: Select the interest rate and frequency of repayment
After completing these steps, individuals can see the minimum required gold amount on that same page. Further, individuals can also view other gold loan information on the calculator page, such as EMI amount, loan tenor etc. However, individuals need to keep in mind that these steps may vary a little as the interface is not the same in different lenders’ websites.
Furthermore, individuals must know that there are several factors for which the minimum required loan may change slightly.
Factors affecting the minimum gold requirement for gold loan
Here are the factors that may influence this minimum weight of gold for a specific loan amount:
Current market price of gold
The lending institution gives the credit advance against the current market price of mortgaged gold. However, the price of gold is volatile and changes almost every hour. Thus, individuals may need to give more gold if the price decreases or vice versa.
Purity of gold
Gold’s purity is the major influencing factor of its market value. 24-carat gold is the purest form of this valuable asset, so its price is higher. However, goldsmiths need to adulterate it for making jewellery, resulting in dilution of its purity and per gram price. A lending institution examines the quality to appraise the price of individuals’ jewellery. So, if the borrowers’ gold has more impurities, they will have to mortgage more assets as collateral.
Now that you know every aspect of the minimum gold a borrower need to mortgage, you also need to understand how to apply for gold loan.
Application process of gold loan
Following is the stepwise guidelines to apply for a gold-backed loan:
Step 1: Visit the official website of your preferred lending institution
Step 2: Find out the form to apply for a gold loan
Step 3: Read the entire goldhow to apply for gold loan loan terms and conditions. Fill in the form correctly and mention the loan amount.
Step 4: Validate your mobile number with the OTP
Step 5: Submit the form
After submitting the form, the lender will get in touch with applicants. It gives borrowers a date to submit all their documents and the gold ornaments for validation. The lender sanctions and disburses the credit advance to the borrower’s bank account after appraising the gold.
Apart from this application process, individuals also need to know the basic documents to keep handy to apply for a gold loan.
Required documents for a gold loan
The loan documentation process is not strict. Individuals do not need to provide annual income records or maintain a healthy CIBIL score to get this loan. Following are some of the basic documents borrowers need to provide while applying for this mortgaged loan:
- Aadhaar card
- PAN card
- Voter identity card
- Driving license
- Telephone bill or electricity bill issued in last three months
Lenders generally validate borrowers’ addresses and identity by all these required documents.
In conclusion, individuals can easily know the minimum gold required for the loan by leveraging the gold loan EMI calculator. This way, borrowers can estimate how many ornaments they must keep ready for mortgaging for their desired loan amount. However, the current price or the purity of gold can change its market price. So, borrowers may stay prepared for mortgaging a little extra or less gold for their credit advance.