According to Experian, one of the world's leading research institutions focusing on personal loan data, Americans loaned a total of $323 billion in 2020, leading to an all-time high borrowing rate increase of 5%. Like millions of Americans going through tough times because of the pandemic, you might be wondering about what personal possessions you can use for collateral. The United States has one of the biggest markets for gold jewelry globally, so many Americans may wonder if they can get a gold loan .
For many Indians, a gold loan represents a part of life. According to market research from the Hindu Business Line, most analysts predict that the Indian gold loan market will grow at an annual rate of 15.7% from 2020, a figure that the effects of the COVID-19 pandemic will continue to amplify. Indians use their loan proceeds to buy property, finance their children's schooling, and make ends meet.
Do I Qualify for a Gold Loan?
You will find the process of getting a gold loan an easy process at the bank. Most non-banking financial companies, established banks, and private lenders will take your gold coins, gold ornaments, and gold bars while only requiring some of the most basic know-your-customer documents.
Qualifying for a Gold Loan in India
In India, unorganized lending services form 65% of the gold loan and jewelry mortgage industry, which broadens the already wide swath of options available to every Indian citizen. However, an unorganized lender might go bankrupt at any time, so it pays to trust NBFCs and banks with your hard-earned gold articles. Organized lenders will keep your gold safe during the span of your loan tenure.
Indian lenders have a set of qualifications for borrowers, which they formally call the gold loan eligibility criteria. You need to meet a set of standards before they can legally process your loan. Even if you go to unorganized lenders, you'll still need to comply before getting access to any cash.
The Indian Jewelry Loan Eligibility Criteria
Most lenders in India won't review your credit history, past bankruptcies, or current financial standing before giving you a gold loan. As long as you have jewelry to use for collateral, they consider a gold loan as a virtually zero-credit-risk endeavor. Most Indian gold loan providers go the extra mile by putting a gold loan eligibility calculator on the front page of their website.
However, you'll need to furnish a bank with a few details about yourself, which you can easily do online. To qualify for any loan amount, you must:
Be a legal citizen of India
Be over the age of 18
Be under the age of 70, with a few possible exceptions
Be self-employed, own a business, or have gainful employment
Present gold jewelry with a verified purity of over 18 karats, or
Offer gold coins or bars of 24 karat purity
Can I Get a Gold Loan if I'm a Senior Citizen?
If you're over 70, you can still avail of a gold loan if you have a co-borrower. Sometimes, a bank might offer you less flexible repayment options or higher interest rates if they think of you as a potential liability.
Your eligibility ultimately depends on the bank or NBFC that will finance your loan. Always check the information displayed on their website before going to a branch in-person to see if you qualify.
Can I Get a Gold Loan if I'm a Minor?
Many Indians start giving their children jewelry shortly after birth. However, for minors, you automatically fail all eligibility requirements, even for a personal loan. A bank won't process loan requests from people under 21 or 18.
What Gold Loan Documents Will an Indian Bank or NBFC Require?
During the loan eligibility verification process, a bank won't subject you to a complete background check. You don't need to have a bank account with them to qualify.
However, even if you meet the gold loan eligibility criteria, a bank of NBFC will need to process a few more documents as they compute how much of your loan amount to finance. Some of the documents required include:
Proof of identification, like your PAN card, driver's license, voter ID, or passport
Address proof, such as utility bills, your rental agreement, or licenses
Two passport-size photos
Some Additional Documents Required
Sometimes, a bank will ask for more details, especially if you want a low interest rate on large loans.
If you ask a bank to finance a loan that exceeds 25 lakhs, they'll have to process your income tax returns for the past three years. They might also ask for income documents, such as your bank statements and salary slips for the past three months.
If you need an unusually high-priced jewelry loan, a bank or NBFC will ask for your Form 16, which will indicate your annual income. The verification process for a costly loan will entail page after page of intensive reading for bank representatives. However, because gold garners a higher rate of interest from global buyers than any other precious metal, you will find the process worth it.
Are There Limits to an Indian Gold Loan?
The approval of your gold loan depends on your eligibility and the items you present. Some banks and NBFCs only accept gold items up to 22 karats, while a few will accept up to 24 karats. Most lending institutions won't accommodate jewelry less than 18 karats.
The aggregate gold weight of your collateral should not exceed 50 grams.
Gold Loan Eligibility in America
No matter where you live in the world, if you type the words "eligibility gold loan" into a search bar, the result will be Indian banks, NBFCs, or a third-party site from one of them. Ironically, access to a gold loan from registered American banks and financial services is harder to find, considering the U.S. has over eight times the gold holdings of India.
Gold: A Forgotten Page in the Book of American Finance
JP Morgan, one of the U.S.'s oldest and largest banks, only began letting their customers avail of gold loans in 2011 despite being over 150 years old. Even when visiting their site, you have to sort through page after page of content before seeing their gold loan page, most of the time, to no avail. As of this writing, it appears they don't offer it any longer or heavily discourage customers from getting one.
Smaller banks like First Republic and Federal Bank still lets people get a gold loan. Some small local banks also feature an online site with a dedicated page for people who want to avail of a gold loan, replete with calculators. However, gold lending appears a mostly forgotten page in the book of American finance.
Most Americans get gold loans through pawnbroking.
The American Gold Loan Eligibility Criteria
If you want to get a gold loan from an American bank, you must do a bit more digging. Look at their loans page and take note of their different standards.
Most banks in the U.S. practice relationship-based pricing, so you can expect to get paid higher or lower loan amounts depending on the following criteria:
Your credit score
Your prior relationship with the bank
Your annual net income
Your debt-to-income ratio
The value of your collateral
Your ability to pay origination fees
Who Can't Get a Loan in America?
You can't get a loan unless you're over 18, and even though U.S. banks appear more lenient when it comes to senior citizens, your chances of getting a loan over 60 remain slim. They also consider prompt repayments on time, so don't have a missed call, or they might deny your next application.
Are You Eligible for a Loan?
Borrowing against your gold bullion, coins, or jewelry stands as one of the best and most secure ways to get your hands on some quick cash. According to Standard and Poor's, precious metal lending will experience a 15% to 18% growth in India in 2021. If you want to jump on this trend, it might be time to visit your local NBFC.
