Why Gold Loan is The Best Option During a Cash Crisis?

In today’s time, the importance of good personal finance management cannot be ignored. It helps an individual not only understand the real value of money but also avoid unnecessary overspending. However, in everyone’s life, there can be instances when the need for some financial aid arises. From a medical emergency to business expansion, educational expenses to house renovation, the reason behind that could be anything. Nowadays, a number of reliable and quick options are available that can help one sail through such financial emergencies. Being one of them, gold loans are considered the most popular as they offer a number of advantages.

What is a Gold Loan?

A gold loan, as the name suggests, is a type of secured loan where you can get immediate access to funds by pledging gold assets. These assets can be anything within the range of 18–24 karats, including gold coins, bars, jewelry, etc. The loan amount is determined by the purity and weight of the pledged ornaments, and you can claim them back once the loan is fully paid.

Suggested Read: A BEGINNER’S GUIDE TO GOLD LOANS IN INDIA

Here are a few reasons why gold loans are the best option to deal with financial emergencies:

Lower Interest Rates

This is a well-known fact that a lower rate of interest leads to a lower loan repayment amount. Nowadays, a number of lending institutions offer easy gold loans at competitive interest rates. There are several different schemes that one can choose from.

Suggested Read: KNOW ABOUT ALL GOVT SCHEMES TO INVEST IN GOLD

Simplified Process

The process of applying for a gold loan is very simple. All you need to do is explore all the options offered by the lending institution and pick the one that suits you the best. Once the application is submitted, you can get the valuation done for your gold assets and submit the required documents. Since gold loans do not require complex documentation, they have a quick turnaround time. Once all the formalities are done, your loan amount gets disbursed within a few days. So, if you need to arrange a large sum of money in a short period of time, a gold loan is undoubtedly the best option for you.

Suggested Read: A COMPLETE GUIDE ABOUT GOLD LOAN PROCESS AND ELIGIBILITY

Flexible Eligibility Criteria

Since gold loans are secured loans where pledged ornaments act as collateral, they have more flexible eligibility criteria as compared to other financing options. In this type of loan, the weight and purity of gold ornaments and the applicant’s age are two major requirements. Anyone who is above the age of 18 years can obtain a loan against his/her gold assets. In addition to this, you also don’t need any income proof or a good credit history. So, individuals who do not have a fixed regular income or a high credit score can also apply for a gold loan. To check your eligibility for the loan and get an approximate idea of the monthly EMI, you can use an online gold loan calculator.

Suggested Read: HOW ARE GOLD LOAN ELIGIBILITY AND AMOUNT CALCULATED?

High Loan-to-Value Ratio

The LTV, or loan-to-value ratio, is the percentage of the market value of your gold ornaments that you can obtain as a loan. So, a higher LTV ratio means you are eligible for a higher loan amount. As compared to other types of loans, gold loans are known to have a higher LTV ratio.

No Restriction on End-Usage

Another major advantage of opting for a gold loan is that it offers complete fund usage flexibility. This means the lender has no restriction on the end-use of the loan amount. Whether you need to pay for your child’s education, renovate your house, expand your business, or do something else, you can use these funds.

Security of Pledged Ornaments

While using your gold ornaments to obtain a loan, you can rest assured about their safety. Leading lending institutions like Muthoot Finance keep all the pledged gold assets in a highly secured vault for the entire duration of the loan. Another good thing is that, in case of a theft, you don’t have to bear any losses.

Easy Repayment

Generally, gold loans come with complete repayment flexibility. At the time of obtaining a loan, you can not only choose the loan tenure at your convenience but also decide how you want to make the monthly payments. At Muthoot Finance, we offer a wide range of digital payment options, such as Google Pay, Paytm, PhonePe, Muthoot Online, etc.

No Prepayment Penalty

Unlike other popular types of loans, gold loans do not come with any kind of prepayment charge. This means you can repay the total outstanding loan amount before the tenure comes to an end, and there will be no additional charges for this.

At Muthoot Finance, we offer hassle-free and quick gold loans at the best interest rates in the market. Using our online gold loan EMI calculator, you can get an approximate idea of the monthly amount you’ll need to pay. Or, visit your nearest Muthoot Finance branch to know more.