Benefits of Gold Loan for Farmers

Availability of credit can help farmers significantly to meet their seasonal agricultural requirements. They can create a maximum opportunity for themselves by timely investing in raw materials, necessary machinery etc. Gold loan for farmers provides them with the required credit advance to meet their financial shortage and remain highly productive. Therefore, it is essential to be aware of all the benefits farmers can gain from gold loans.

Features and benefits of gold loans for farmers

Here are all the benefits that farmers can reap by taking a loan against their gold:

• High loan amount

Farmers can get a substantial credit amount by taking a gold loan. They need to keep their physical gold as collateral. Individuals should keep in mind that lending institutions give around 75% LTV on the current market price of gold. At this LTV, farmers can get Rs.7,50,000 of credit advance by mortgaging the gold valuing Rs.10,00,000.

• Lenient documentation

The documentation process is relatively lenient for a gold loan. Thus, farmers can avail significant loan amounts by giving a few documents mentioning their identity and present address. Therefore, a gold loan is one of the hassle-free ways for farmers to meet immediate credit shortages.

• Low rate of interest

An Agricultural gold loan come at a minimum interest rate. An average gold loan company in India charges an interest rate between 7-15%. However, this rate differs across several lending institutions. So, applicant farmers need to check this borrowing cost from the official websites of different lenders before taking this gold-backed loan.

• Adjustable repayment tenor

Farmers can choose a suitable loan tenor for paying off all their dues. Generally, individuals need to pay higher instalments in a low loan tenor. So, it is crucial to know how much EMI amount is easily payable for them. They can utilise a gold loan EMI calculator to understand the payable EMI amount against a tenor. These calculators are available on the websites of most gold loan companies in India.

• No end-usage restriction

Farmers get the entire loan amount in their bank account. They can use the credit to meet any of their financial needs. Thus, they can buy land for cultivation or invest in their inventory.

• Safety of gold

Lending institutions keep farmers’ valuable collateral under vault with advanced security features. So, all their precious jewellery stays secure and protected till farmers release them after paying off the loan. Further, individuals get the benefit of insurance on their pledged physical gold. This way, they get complete coverage if their assets are lost or misplaced.

Apart from the benefits of this agricultural gold loan, individuals should also be mindful of the documents they need to submit.

Agricultural gold loan document list

As mentioned earlier, the documentation process is not stringent in a gold loan. Following are the documents farmers need to submit for getting a gold loan:

• PAN card
• Ration card
• Aadhaar card
• Voter id card
• Bank account statement
• Utility bill issued within last three months (Telephone bill, electricity bill etc.)

After knowing the required documents of a gold loan, they should also learn how to apply for this credit advance.

Application procedure of Agricultural home loan

Before applying, individuals should identify a lender offering low interest gold loan, fewer additional charges, etc., to reduce their borrowing cost. Next, farmers have to follow the stepwise guidelines as mentioned below to apply for a gold loan:

Step 1: Visit the official website of a lender.

Step 2: Find the gold loan application form.

Step 3: Fill in the form appropriately.

Step 4: Verify the OTP received in registered applicants’ mobile numbers and submit the application form.

After these steps, farmers will complete their online application for a gold loan. Next, lending institutions contact borrowers to instruct them about the documentation and gold appraising process. Finally, individuals get the loan amount credited to their bank accounts after finishing all these proceedings.

In conclusion, individuals can invest adequately in their cultivation with a gold loan for farmers. This way, they can be more productive and create significant opportunities for earning. Further, for being a loan without usage restriction, they can use the money in any field they want.