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In India, the practice of using gold ornaments as collateral to avail loans has been prevalent for ages. During old times, people would pledge some gold items (coins, bars, jewellery, etc.) with the lender as security when borrowing money. In today’s time, the process is somewhat similar, but the types of lenders have changed. There are a number of banks and NBFCs that have created an organized structure for this age-old practice of pledging gold to obtain funds. These financial entities offer loans up to a certain value of the gold items, the borrower pays interest on the loan availed and receives his/her gold assets back when the entire loan amount is repaid. It helps individuals use their idle gold assets and get over any temporary financial crisis.
Unlike other common types of loans, such as a home loan or car loan, where the funds can only be used for specific purposes, a gold loan comes with complete flexibility on fund usage. In almost everyone’s life, there can be times when funds are required for unplanned expenses at short notice. The reason could be anything, such as medical emergencies, education-related expenses, etc. In such situations, gold loans are one of the best options to obtain funds with no restrictions on the end use. In addition to this, interest rates on gold loans are comparatively lower than those on other types of loans. This also makes it a preferable option for customers as compared to other financing options.
Here are a few other common reasons behind the increasing popularity of gold loans among customers:
Simplified Application Process: The application process for obtaining a gold loan is very simple and requires minimal documentation.
Quick Disbursal: Since a gold loan is a type of secured loan where gold ornaments are used as collateral, loan disbursal does not take more than a few hours. This makes a gold loan a preferable option for urgent cash requirements.
No Credit Score Required: Unlike other loan options where a good credit score is required to become eligible, gold loans have no such compulsion.
Security of Pledged Assets: While availing a gold loan, the applicant can be assured about the safety of gold items that are being pledged. Lending institutions (banks and NBFCs) use a secure vault to store the ornaments.
Now that you have a fair idea about why this is one of the easiest ways to arrange funds, let’s discuss how the interest rate on a gold loan gets calculated:
Offering a number of schemes, Muthoot Finance is one of the best gold loan providers in India. Here, you get the option to avail a gold loan at the best interest rates. However, the applicable interest rate for a gold loan depends on several factors, such as the loan amount, loan tenure, loan required, and the value of the gold one is going to pledge. Muthoot Finance also offers a number of tools to navigate its customers in the process of availing of a gold loan such as the Muthoot finance gold loan Monthly Interest Payment calculator, gold interest rate calculator, etc.
An applicant can use the gold loan interest calculator on Muthoot Finance’s official website. This is an online tool that you can use to determine the total amount of applicable interest while availing a gold loan. This calculator has different fields where you need to enter information such as the weight of the gold ornaments, purity of the gold, loan amount, loan tenure, etc.
Here are a few benefits of using Muthoot Finance’s gold loan interest rate calculator:
Faster Calculation: Although Monthly Interest Payments and the total payable interest on a gold loan can be calculated manually, the process is time-consuming. By using the Muthoot gold loan Monthly Interest Payment calculator and interest rate calculator you can calculate the Monthly Interest Payment and total applicable interest within a few minutes.
Accurate Results: This is a well-known fact that manual calculations leave room for errors. With the Muthoot gold loan interest rate calculator, you can ensure accurate results while calculating interest amounts.
Easy to Use: This online gold loan interest rate calculator is very easy to use. It features different fields to enter different loan components. Once all the required values are entered, the results are displayed in no time.
Finance Management: When you have a clear idea about the Monthly Interest Payment amount and total payable interest beforehand, it gets easier to plan the loan repayment.
With Gold Loan at Home by Muthoot Finance, you can avail a gold loan from the comfort and privacy of your home. You can use the Muthoot Finance gold loan interest rate calculator to check the applicable rate of interest. Register for a home visit today.