Reasons Why Gold Loan Is Considered As The Best option During Financial Crisis

Gold Loan
Gold Loan

Gold loan, or a loan against gold, is a guaranteed loan that a borrower takes from a lender by pledging gold ornaments such as jewellery, coins, etc. A certain percentage of the gold’s value is usually the loan sum approved by lenders to you. You can pay it back by monthly instalment, after which you get back your gold commodities. 

Unlike other loans such as home or car loans, there is no limit on the final use of gold loans. So, if you need to finance a wedding, family vacation, or your kids’ education, it’s a great way to meet your sudden demand for cash. Also, several non-banking financial institutions provide gold loans at competitive interest rates along with easy repayment options. 

If you want to determine the credit, you will get for any or all of the gold you have; Muthoot gold loan calculator is a way to go. It is a method that helps you to ascertain the loan amount based on the value of your pledged gold or the term you want to take the loan for. However, keep in mind that gold prices fluctuate daily and depend on various external factors, demand and supply of gold, inflation, and many more. This can further affect the loan amount you can get from your shortlisted lender. 

Seven reasons why Gold Loan is the best option during a financial crisis

1. No need for a credit score

Your credit score is important in deciding whether to accept or reject your loan application. If your credit score is low, the loan provider charges a higher interest rate. However, your credit score does not matter as long as you have gold ornaments to secure a gold loan.

2. Two options to repay the loan

Select how you wish to repay the amount of your loan. You can repay a specific amount in the form of EMIs, which is the sum of principal and interest every month. You can also refund the loan by paying the lender a lump sum amount. Your ability to arrange funds and your other financial capacity are some factors that you must consider while deciding the option to repay your loan.

3. Flexible tenure

As per your convenience, you can select the repayment tenure. To repay the loan amount to your lender, you can choose a term that you believe will be appropriate for you. However, the loan provider will charge an interest rate based on the repayment tenure and the loan amount.

4. Lower interest rates 

The interest rates on gold loans are usually lower than personal loans. It is a relatively low-risk loan for lenders since they keep the gold as collateral. If we talk about the overall amount of the gold you have pledged, the interest rate often varies based on how much you want to borrow. When the loan volume is not more than 50%-60% of the total value of the gold pledged, the interest rates are lower.

5. Fast processing  

Gold loans are among the fastest loans to be sanctioned. If you apply for the gold loan, lenders have your gold as protection, thus eliminating the need for credit scores or report checks. Hence, in a matter of minutes or only a few hours, the loan can be availed over the counter.

6. No proof of income required

In many situations, because your gold is kept as collateral by the lender, you are not required to present a salary certificate. You will still be eligible for this form of a loan, even though you are unemployed or do not have a strong credit score.

7. Easy eligibility 

A gold loan can be provided to someone who has gold. Unlike personal loans, which have strict eligibility requirements, any Indian citizen, including salaried professionals, business people, homemakers, and even farmers, may benefit from gold loans. To be eligible for a loan, you don’t need to have a decent credit score. You can still get funds if you have a low credit score, provided you have enough gold to pledge for it.

In a nutshell, gold loan is one of the best options to fulfil your urgent cash requirements. You can apply for it either online or visit the nearest lender’s branch. No matter what option you choose, make sure you have compared the different gold loan schemes before applying for the loan to get the deal appropriate for your financial needs. 

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