How Gold Loans can help in COVID Surge Situations?

In the recent few months, demand for a gold loan has significantly increased among Indians. The significant cause for this upsurge in credit demand among individuals can be attributed to the Covid-19 fuelled lockdowns and subsequent economic turmoil. When there’s a need for financial backup to pay emergency medical bills, school fees and meet other such requisites, most individuals rely on credit forms like gold loans.

Moreover, the simple documentation and gold loan eligibility makes it easier for a potential borrower to turn to this financing option. Since most Indians prefer investing in gold ornaments and passing them down for generations as an asset, making the most out of this asset seems justifiable.

Following is a look at the gold loan features that can prove to be beneficial during Covid-surge situations.

What are the features of gold loans that can prove beneficial during emergencies?


  • Considerable credit

Managing the expenses related to the current situation is quite challenging. In this regard, a gold loan extends substantial credit based on the LTV ratio. According to a report, RBI has increased the LTV ratio on gold loans upto 90%. This data further substantiates the benefits of availing of the said credit during a financial crunch.

This feature gets leveraged with zero end-use restrictions that allow borrowers to make big-scale spending with ease. Thus, whether one needs to pay off medical bills or stabilise their finances, a loan against gold fulfils the requirements.

  • Suitable repayment options 

Aviling a loan obligates a borrower into a repayment structure based on the chosen tenor. Here, an applicant’s credit profile and CIBIL score also play a vital role in determining the levied interest rate. However, a gold loan from lenders like Bajaj Finserv doesn’t follow such an arrangement.

Instead, it offers a wide range of repayment options. For instance, individuals can choose to pay interest at the beginning of a tenor or on a monthly or quarterly basis and settle the principal later. They can also stick to paying regular EMIs.

Borrowers can choose the repayment option based on their financial capability. This also gives them a chance to initiate savings for future endeavours.

  • Reasonable interest rates

Gold loans have proven their worth during this pandemic with their affordable interest rate. Individuals possessing a considerable amount of gold can easily avail of a sizeable loan amount. Moreover, if the purity and value of gold are certified, the chances of availing of low-interest rates increases.

This again lowers the burden on disposable income and aids in ensuring healthy savings. However, the levied interest rate can vary according to lenders and their policies. It is therefore vital to compare lenders before making a loan application.

What are the eligibility criteria for gold loans?

Most lending institutions lay down certain eligibility parameters to scrutinise an applicant’s credibility. Complying with these criteria aid an applicant in streamlining loan processing and disbursal.

In this regard, gold loans are quite lenient. Applicants need to fulfil minimum gold loan eligibility to access the required credits.

Following are the eligibility requirements to avail of a loan against gold:

  • Applicants must belong to the age bracket of 21 to 70 years
  • Any self-employed or salaried individual, farmer, businessman or trader are allowed to make an application.

Apart from surpassing the eligibility requirements, applicants also need to submit certain documents to avail of this loan.

Some of the common gold loan documents individuals need to submit are:

  • Address proof like PAN Card, Aadhaar Card, Voting ID, Driving License, etc
  • Identity proof
  • Potential borrowers also need to submit income proof
  • Documents related to the collateral

It is imperative to know that applicants may be required to submit additional documents based on the lending institution.

Individuals who fulfil the gold loan eligibility and documentation can easily gain the benefits. They can access the credit and make most of it during financial emergencies.

Facing financial issues are common during these tough times. In this regard, individuals looking for a secured credit form can easily depend on a loan against gold.

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