7 Secrets to Boosting Family Finances with Gold Loans

Gold has always been a symbol of wealth, status, and prosperity in India. Indian households purchase gold for any auspicious occasion, such as a festival or wedding. Despite its emotional value, gold can be a valuable asset when seeking financial assistance. Individuals can use gold as collateral to secure a variety of gold loans from numerous banks and non-banking financial institutions (NBFCs).

Table of Content:

• Consolidate Debt
• Finance Business Ventures
• Avail Tax Benefits
• Use Loan Funds to Make Investments
• Fund your Education
• Boost your Credit Score
• Opt for Gold Loan Overdraft
• Conclusion

With the flexibility to use the funds obtained from a gold loan for purposes like education, healthcare, personal, or commercial, it is an attractive option for people not only looking for immediate financial requirements but also to manage and increase their family finances.

Consolidate Debt

You can use a gold loan to consolidate multiple active debts into a single loan with a lower interest rate. It will help end the hassle of repaying multiple debts. With a single loan, you can pay all your debts, such as credit card balances and other borrowings. This can help you save money on interest payments and reduce your overall debt burden.

Gold loans are more affordable because they have better repayment flexibility and a nominal interest rate. This financial strategy replaces a variable high interest rate with a lower interest rate, giving you more control over your finances, paying off debts efficiently, and saving money in the process.

Finance Business Ventures

If you have a b desire to launch and grow your own business and are exploring various financing options, a gold loan can be useful. One of the biggest benefits of taking out a gold loan is the instant access to funds that you can use to start your new business venture. Due to the secured nature of gold loans, lenders can offer more favourable terms, such as lower interest rates and multiple repayment options. Due to the flexible repayment options and low gold loan rate of interest, you can reduce your borrowing costs and increase your profit margin. Moreover, the interest paid on the gold loan taken for business purposes can be claimed as business expenses under the Income Tax Act, 1961. This deduction can help businesses to bring down their tax liabilities.

Avail Tax Benefits

It is beneficial to take out the gold loan for specific expenses due to the potential gold loan tax benefits. Tax deductions on a gold loan vary depending on how you use the funds. You are eligible for a tax deduction under Section 80C of the Income Tax Act, 1961, if you have taken a gold loan for home repair and improvement for up to 1.5 lakh, and under Section 24 of the income tax, you can claim deductions of up to ₹2 lakhs for the purchase of residential property.

You can also submit your gold loan documents to claim the interest you pay towards the gold loan as a cost of acquisition if you use the loan to purchase assets other than your home, such as equity, bonds, or other possessions. This tax deduction can reduce your taxable capital and cut your tax liability.

Use Loan Funds to Make Investments

Managing the cash flow can have a significant impact on financial stability. Having a streamlined cash flow ensures you can face any financial crunch. Making high-return investments is a great way to increase cash flow. A gold loan provides a high loan-to-value ratio, enabling you to invest a substantial amount in high-return stocks, bonds, or other short-term ventures. Investment in high-return ventures can help generate additional income and improve overall financial health.

Fund your Education

Gold loans have become the preferred means of financing a childs higher education, as the procedure for obtaining the education loan is far more tedious and takes time than gold loans. However, the primary reason for this preference is the low gold loan rate of interest compared to education loans. The attractive features of gold loans and low interest rates make them a preferred option for education funding. Paying a low interest rate can help save money in the long run, which can add to the family's financial stability.

Boost your Credit Score

Having a good credit score is important because it affects your ability to obtain credit and the interest rates you pay on loans. To build a good credit score, you can take a gold loan since you are using gold as collateral, and the low rate of interest on the loans can help in making timely payments, boosting the credit score. Furthermore, opting for a gold loan can help diversify the credit mix, which can have a positive impact on your credit score. A good credit score results in a lower interest rate, promoting healthy financial habits and long-term savings.

Opt for Gold Loan Overdraft

A gold loan overdraft facility allows gold owners to access credit with a limit when needed, using the gold loan as collateral. The lender creates a credit line for the borrowers based on gold's current market value. When you take advantage of the gold loan overdraft facility, you can withdraw as much as you need and only pay interest on the amount used. You can get the overdraft against the gold immediately, which allows you to meet any short-term liability without default, and the interest rate levied only on the utilised amount can help you save on interest costs.

Conclusion

A gold loan can help you manage and improve your family's finances. You can use the gold loan in any way you want, and the lower interest rates allow you to save money in the long run.

At Muthoot Finance, we offer gold loans with low interest, quick disbursals, easy repayment options, and no preclosure charges. We also offer instant gold loan at home service, allowing you to get a gold loan from the comfort of your home. With features like a gold loan calculator, minimal documentation, and various gold loan schemes, Muthoot Finance helps you fulfil diverse needs.