Farming comers under the self-employed sector when applying for a gold loan. The bank tries to find out if you can pay back the loan borrowed or not. Hence you are required to submit profit proofs or GST returns of your business. Framing is the sector is subsided by the government and they don't need to pay taxes and rightly so because their business does not have a steady income and it is heavily reliant on the nature for making profits. A lot of low-income farmers don't maintain profits proofs as the income is not so much that they can put in a bank and have some interest over it. Other high-income farmers seldom maintain their income proofs as it is not a habitual practice for farmers in general.
If you don't have profits proofs, tax returns, and a credit score it can be difficult to get an unsecured loan from the bank. Keeping you agricultural land for a mortgage might not be a great idea as their livelihoods are dependent on that very agricultural land. Although a lot of farmers do invest in gold because of the aforementioned reasons. If you buy gold at it's the lowest price and sell at it's highest price then gold investments can prove themselves, a good financial decision. Although if your investments are in gold then selling them to liquidate your assets cannot be considered a good financial decision.
We can liquidate gold assets without selling than through a gold loan. If processing and evaluation charges are not too high then this is A good idea as your gold will be returned to you at the end of the tenure, your assets are safe with the bank, and you also don't have to pay a huge chunk of money upfront. Paying timely EMI's rather than paying all the expenses upfront is a comfortable decision for a lot of people.
SBI gold loan does have a good gold loan scheme for farmers. They provide a loan of 80% of golds value which us less than others but they also provide a very low-interest rate of 7%. They don't require you to submit income proofs or profit proofs of any kind either. This is a very attractive scheme for farmers or anyone in general. They don't even require you to have a salary account with their bank. You can avail a gold loan just on your savings account in the state bank of India. This being a nationalized bank there are no worries for your gold as it will be kept in a safe locker. Evaluated by the professionals best of their field. Gold insurance can be taken to foresee the security of your gold. And the gold will be returned to you in the condition that you submitted them.
Just like any other place gold has to be of 18-carat purity for a gold loan to be availed. This is a bare minimum condition for a gold loan and it cannot be availed for gold that has less purity than 18-carat.Try to avoid gold which has diamonds or pearls in it as it is of no use for a gold loan. Gold is only evaluated for the gold in it and not anything else.
The gold loan also comes with an evaluation fee and processing charges. If you don't want them to be cut from your disburse amount then keep some money aside to pay all these fees or else you can request the bank to add all such fees to the payback amount. Remember all loans come with a risk and it is in our hand to take calculated risks for our finances to make sure that we make more money in the longer run. Gold loans are no exception to this rule. If you don't pay your EMI's in the tenure fixed by the bank then the bank does have the right to sell the gold to procure the amount which you borrowed.You can end losing your gold or sacrificing your finances to pay back the EMI's. Only take the loan when you know you can pay the EMI's back in the fixed tenure.
