From how the amount of your loan is determined to how your gold is safely stored – everything you need to know

In simple terms, a gold loan is a secured loan where the person borrows money from the bank against the security of their gold. The value of the gold is calculated based on the weight, purity of gold, gold rates, and the Loan to Value (LTV) ratio of that day. When the loan is paid off in full, the gold goes back to the person who borrowed it.

Unlike a personal loan or a credit card, a gold loan has an attractive interest rate and eligibility criteria that can be easily met by anyone. It is thus available to anyone who is a salaried person, business professional, or even a pensioner.

Eligibility Requirements

Bajaj Finance has a criterion for application acceptance for gold loans for Indian citizens, which clearly states that the citizen’s age must lie between 21 years and 80 years. The eligibility criteria have been designed to be as simple as possible. Its emphasis is more on the value of gold being pledged rather than on the owner’s financial background.

Jewellery made of gold, ranging from 18 carats to 22 carats in purity, is allowed for collateral purposes. Gold coins with a purity of up to 24 carats are also acceptable. Jewellery or items having purity lower than 18 carats, for example, 14 carats or 9 carats, do not qualify.

Loan amount calculation process

The amount of the loan is not determined by what the borrower spent to buy the gold. The amount of the loan is determined based on the weight and purity of the gold, as well as the current market rate.

As far as valuation is concerned, Bajaj Finance Ltd. makes use of the lesser of the two: the closing price of the previous day and the 30-day average closing price issued by the India Bullion and Jewellers Association (IBJA) or the SEBI-regulated commodity exchange. This approach helps to ensure that valuation remains reasonable and accurate.

The value of the stones or other decorations attached to the jewellery will not be considered for evaluation. The weight of only the gold is calculated.

Bajaj Finance provides a loan against gold that ranges between Rs. 5,000 and Rs. 2 crore, depending upon the value of the gold and LTV ratio.

Required Documents

One of the more pragmatic considerations about a gold loan is that it needs hardly any documents. The documents needed by Bajaj Finance include:

• Aadhaar card
• Voter ID
• Passport
• Driving licence
• NREGA job card
• Letter from National Population Register (NPR)

Proof of income, such as a salary slip or bank statement, is not required.

Method of repayment

There are various methods of repaying the loan amount from Bajaj Finance, depending on your budget:

• Interest payment monthly and repayment of principal at the end of the period
• Interest to be paid bi-monthly and principal repayment at the conclusion of the period
• Interest payment every quarter with repayment of principal at the end of the tenor period
• Interest payable every half year, with the principal at maturity of the term
• Interest payment every year with a lump sum at the end of the period

Partial prepayment is possible throughout the duration of the loan. There are no foreclosure fees, which means that the borrower can pay off the loan before its due date without incurring a penalty.

Safety measures taken for the gold

One of the main concerns of first-time loan takers is how their gold will be kept secure while it is on loan. At Bajaj Finance, the gold is secured in fully insured vaults to protect against any losses caused by misplacement, theft, burglary, or fire.

Procedure to apply

There are two ways to apply for a gold loan from Bajaj Finance:

Offline: Approach the nearest Bajaj Finance branch office with your gold and one KYC document. Their team verifies the quality and quantity of your gold, determines the eligible loan amount, and disburses the amount on the same day.

Online: Applications may be processed via the Bajaj Finance website or mobile app. After submitting the application, a representative will contact the applicant and help them with the process further.

Gold Loan & Credit Score

The gold loan is reflected in the credit report of any borrower under the category of ‘secured loan.’ The gold loan does not have an adverse impact on the credit score of any borrower. On the other hand, the repayment record impacts the credit score; timely repayments help to raise the CIBIL score.

Please note T&C apply.

About Bajaj Finance Limited

Bajaj Finance Ltd., a subsidiary of Bajaj Finserv Ltd., is a deposit-taking Non-Banking Financial Company (NBFC-D) registered with the Reserve Bank of India (RBI). It comes under the category of NBFC-Investment and Credit Company (NBFC-ICC). BFL is involved in the business of making loans and accepting deposits. BFL has a diversified portfolio of loans, which includes retail, SME, and commercial customers with a strong presence in urban and rural India. The company accepts deposits from individuals and corporates and provides a wide range of financial services products.

BFL is an organisation with a history of thirty-five years that has emerged as a major player in the NBFC industry in India, and as a whole, it has a customer franchise base of 69.14 million. BFL has a domestic credit rating of AAA/Stable for long-term borrowings and A1+ for short-term borrowings. For its FD program, the company holds a credit rating of CRISIL AAA/Stable & [ICRA]AAA(Stable). BFL has an issuer credit rating of BBB/Stable for long-term and A-2 for short-term by S&P Global Ratings.

To know more, visit www.bajajfinserv.in