Why is a co-applicant not needed to avail a gold loan?

A co-applicant is a person who applies for a loan along with the main applicant or borrower. Co-applicant works like a backup option for the repayment of the loan. In case the main borrower fails to pay the loan back, it is the responsibility of the co-applicant to pay off the dues. This is a way to get the assurance of reimbursement. A minor cannot be a co-applicant as they cannot enter any contract legally. Usually, a spouse or a blood relative can be allowed to be a co-applicant or nominee.

In the case of a gold loan, any applicant who is above 18 years of age and can produce the KYC documents along with the gold is eligible to avail of a gold loan without any co-applicant. However, if the applicant's age is between 70 to 75 years a co-applicant or nominee is necessary. The co-applicant should be a blood relative of the person and should be able to produce his/her KYC documents along with a photograph. An applicant above 75 years of age cannot borrow a gold loan even if they have a co-applicant with them.

Gold loans are secured loans and the lenders never have the risk of suffering loss. It is because the gold is pledged against which the loan is provided. Only about 75-80% of the total value of gold can be given as a loan. The remaining part is to deal with the market risks. A co-applicant isn’t needed for a gold loan because the lenders always have the option of selling the gold to recover the loss. Thus, the basic requirement of co-applicant is already secured by gold, so there isn’t the need for a co-applicant. 

You just need to provide the KYC documents and sign the loan agreement. Further, you need to provide gold articles which are at least 18K pure. With higher purity, the rates of the gold loan per gram will increase. These are the only checkboxes you need to check to get your loan sanctioned. The lender feels secure when he has the gold as collateral. And with trusted schemes like SBI gold loan, you can be assured of the security of your gold. SBI gold loans offer the lowest interest rates and are very convenient to avail.

Also read this: When you have bad credit and require loans