Getting a gold loan at a substantial rate can help you weather the financial storms in your life. In case of an emergency like an accident that brings along hefty medical and vehicle repair bills, mortgaging your gold is a great option.
However, parting from that treasured heirloom or the set of earrings you bought with your first bonus can be overwhelming, even if temporary. One of your biggest concerns is perhaps the safety of your mortgaged gold.
Loans and Lockers
When in need of urgent funds, instead of selling, opting for a gold loan with low interest rates might be a better choice for you. It helps you retain your asset and also enjoy its complete value.
In this case, the purity and quantity of the precious metal are checked by the lenders and then taken away as collateral. For the complete tenure, banking institutions offer a locker facility to keep the pledged assets secure.
In order to utilize this facility in India, the borrower is asked to submit their KYC documents, and an application form, along with a locker agreement. With such useful solutions, lending institutions look to build trust amongst customers looking to opt for a gold loan. Before you make your decision to apply for a locker facility for your loan, let’s understand its various features and benefits.
Safety
A locker helps keep your previous gold safe from theft. Your gold is placed in secure vaults which consist of entry/exit monitoring, along with electronic surveillance systems.
Insurance
As per guidelines issued by the RBI, effective 1st January 2023, in case of damage or loss of gold, the lender is liable to compensate the borrower. To help better serve you, multiple lenders provide you with additional insurance for your mortgaged gold.
Herein, if your gold were to be stolen, you could receive up to 100% value of your gold as compensation for the loss. This adds another layer of protection for your yellow metal being held as collateral. Meanwhile, if your gold is lost/damaged due to natural calamities, the bank is not liable to compensate you.
Charges
Getting a bank locker usually comes with some predetermined charges. These can go up to ₹9,000 a year with added GST. However, when you get a loan from a financial institution, they may offer you this facility free of charge. The cost of getting a locker may vary from one lender to another.
Nomination
When you are allotted a locker by the lender, it is essential to add a nominee. In case of sudden demise, your nominee will be eligible to access your gold. If the locker is owned by multiple individuals, your nominee will still be allowed access in your absence. If a nominee has not been declared the assets placed in the locker will be handed over to the legal heir.
Eligibility
Any individual, business, trust, or association is eligible to get a gold locker facility in India. However, one of the most important criteria of availing a locker facility is that they should be an existing customer of the financial institution at the time of applying.
Documentation
Typically, when an individual applies for a locker, they are asked to submit a list of documents. This is not the case when you utilize the locker facility for your mortgaged gold.
The reason for this is that while applying for the gold loan, you have already submitted the required documents and do not need to repeat the process, leading to a hassle-free application.
A locker is a secure facility which allows you to borrow the required amount without worrying much about your physical gold. You can trust your lender with your ornaments and utilize the borrowed amount to tackle various emergencies. Now that you are assured of your asset’s safety, let’s look at the actual process of getting the loan.
Gold Loan Eligibility and Documents
When borrowing, you are likely to consider aspects like the gold loan interest rate, tenure, and additional charges. But before you do that, have a quick look at the eligibility requirements to ensure that your loan application process is seamless.
- At least 18 years old
- Indian citizenship
- Gold purity – between 18-24 Carats
If you hold true to the aforementioned criteria, your application is likely to be approved by the lenders. With the eligibility established, it’s time to get started on the process of getting the loan. Here is a short list of documents you might be required to submit when applying:
- Identity Proof – PAN card, Aadhaar card, voter ID, ration card, driving licence, or passport
- Address Proof – Aadhaar card, driving licence, utility bills, voter ID, or passport
A gold loan can help you get the required funds instantly with minimal documentation and comparatively lower interest rates. This secured line of credit makes it easier for you to meet your short-term financial obligations, while also allowing you to retain your gold. Make the most of your precious ornaments with the help of a gold loan.
Also read: Why People are Turning to Precious Metals Due to Bank Failure
