Kartnataka
  • February 9, 2023
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10 Reasons Why Gold Loan is Best for Financial Needs

Gold Loan

Despite all the planning, almost everyone faces situations at some point in their lives when some kind of financial aid is required. The reason could be anything; funds are needed to expand a business, make a major purchase, cover educational expenses, or for something else. To meet such urgent fund requirements, taking a loan is an ideal solution. That being said, it is extremely important to choose the right type of loan and to make sure that the loan is paid off without any kind of delay.

In a country like India, gold loans are one of the easiest and fastest ways of arranging funds to get over a financial crisis. The reason behind this is very simple; India is one of the major importers of gold in the world and is a place where this precious metal holds great sentimental value for people. For ages, people have been investing in different forms of gold, including bars, coins, ornaments, etc., as it is one of the safest options and offers high returns on investment as well. Similarly, borrowing against gold is not a new concept either. However, the process and the sources have changed with time, but the security and flexibility associated with gold loans are still the same. Nowadays, people use their gold ornaments to obtain loans.

What’s Making Gold Loans Popular?

There are a few factors that are contributing to this constant rise in the gold loan market in India, including easy availability, quick disbursal, a competitive rate of interest, payment flexibility, etc. Other than this, liquidating their gold assets to get over a temporary cash crunch is the last thing anyone would want. But when they apply for a gold loan, they only have to pledge those assets and can get them back as soon as the loan gets paid. For people who are going for small loan amounts and flexible tenures, there can be no better option than this.

Let’s dive deeper and discuss some of the common reasons why a gold loan is one of the best financing options:

  • Simplified Process Applying for a gold loan is very simple. There are a number of banks and NBFCs that are offering the facility of an easy loan on jewellery and other gold ornaments. One can submit the loan application online or offline, and after following a few simple steps, the loan gets sanctioned.
  • No Credit History Required This is one of the most important benefits of a gold loan. Unlike other popular financing options, one doesn’t need a good credit score in order to avail a gold loan. People with poor credit scores or no credit history can also apply for a loan. The application is approved on the basis of the quantity and purity of the gold one is going to pledge. For an NBFC or bank offering a gold loan, the pledged gold items work as security. One good thing is that if you repay your loan amount in a timely manner, it can actually help improve your credit score as well.
  • No Additional Charges Gold loans are great finance options as they do not have any additional charges involved other than the interest that is applicable. They come with zero processing fees and no prepayment charges. This way, the borrower also has the option of early loan repayment without having to pay any extra fees.
  • Simple Eligibility Criteria Any individual who is above 18 years can apply for a gold/jewel loan. With flexible eligibility criteria, this is definitely one of the easiest financing options available in the market. The applicant can be either a salaried or self-employed individual with repayment capacity.
  • Low Interest Rates Gold loans have become a preferable option because of the highly competitive interest rates they come with. This is a well-known fact that gold loan interest rates are inversely proportional to the market rate of gold. Due to the constantly increasing price of gold, one can now avail a jewel loan at a low interest rate.
  • Storage Safety While availing a gold loan, you can rest assured about the safety of the ornaments you have pledged. Your assets remain safe as the lender keeps them in a secure vault. The good thing is that in case of any theft, the borrower doesn’t have to bear any losses.
  • High LTV Ratio Gold loans are one of the fastest ways to arrange a large sum of money within a short period of time. In this type of loan, the LTV, or loan-to-value ratio, is higher as compared to other financing options. This means you can get a loan for a larger amount when you go for a gold loan.
  • Quick Loan Disbursal Gone are the days when loan disbursals used to take days and weeks. The best thing about availing a gold loan is the quick disbursal process. Once the application is submitted and verification is complete, the loan gets sanctioned in absolutely no time.
  • Easy Repayment One can choose to repay the loan amount at their convenience. There is an option to take the Monthly Interest Payment (Equated Monthly Installments) route with several different tenure options. One can choose a loan tenure of their choice and repay the loan without putting some extra stress on their pocket.
  • Fund Usage Flexibility All the popular financing options such as home loans, car loans, etc., come with certain restrictions on fund usage. But the case is completely different when you avail a gold loan. One can utilise the loan amount the way he/she wants. The money can be used for several purposes, such as purchasing assets, business expansion, investment, stock buying, holidays, household expenses, travel, or something else.

    With Gold Loan at Home by Muthoot Finance, one can avail a gold loan at home at the best interest rates and with minimum paperwork, right from the comfort of your home. Register for a home visit today.

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Bridge Financing: Using Gold Loans to Meet Short-Term Cash Needs

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