Gold carries a sense of security along with a forever upward-trending monetary value.
People buy gold with their surplus cash to use in times of peril.
They can sell off this gold deposit when you have an urgent cash requirement, but it would deprive them of future appreciation of its value.
A better way of using your gold valuables for getting urgent cash is by taking a gold loan.
Among different options of arranging funds like taking a personal loan, using a credit card, and selling off property, taking a gold loan has several advantages and unique features.
Benefits of Gold Loan Over Other loans
The unique and customer-friendly features and benefits of a gold loan make it stand out from other loans. These benefits are:
- Interest rate: The interest rate decides the cost of the loan for a borrower. It is the amount of money a borrower has to pay to the lender above the loan amount. The interest rate at which a gold loan is available is much lower compared to other options like a personal loan. Muthoot FinCorp offers gold loans under various lending schemes starting at only 11.99% per annum.
- Loan disbursement: The processing time to disburse a gold loan is much lesser than other loans. It makes it the first choice of people looking for early cash. The eligibility criteria for getting a gold loan are also very lenient, further speeding up the loan process.
- Anytime liquidity: Time is crucial when someone needs emergency funds. Where other loans can take days to get disbursed, a gold loan gets disbursed within minutes once the customer submits the gold and required documents. Due to this, gold loans are called ATL or anytime liquidity loans.
- Pay interest only option: A gold loan comes with a unique feature of paying only the interest amount during the loan duration. In this case, the borrower can pay the principal at the closing of the loan. This feature is very beneficial for people facing a temporary financial crunch but expecting to have surplus cash by the end of the loan term.
- Low processing fees: A processing fee is a fee charged by the lender on the loan amount. Other loans like personal loans come with high processing fees that may go up to 2-2.5% of the loan amount. On the other hand, the processing fee on a gold loan is negligible. The processing fees for gold loans at Muthoot FinCorp start at only Rs. 20, including GST, under various customised gold loan schemes.
- Zero foreclosure charges: Sometimes, the borrower may want to pay back the loan amount early if he gets the surplus funds. It can save him from paying the interest charges applicable on the loan. Usually, lenders charge a high processing fee on the early closure of a loan. However, lenders like Muthoot FinCorp charge zero processing fee on the foreclosure of a gold loan after three months of sanctioning the loan. It can reduce the cost of the loan for the borrower.
- No need for income proof: Other loans like personal loans require the loan applicant to have a steady source of income. He should also have a minimum monthly income to get these loans. It is not the case with a gold loan. A gold loan applicant need not furnish any income proof to avail of the loan.
- Not dependent on credit score: Lenders conduct detailed background checks on the loan applicant and closely scrutinise his past payment records to assess if it is safe to give him a loan. In the case of a gold loan, the lender has the assurance of the customer’s pledged gold. Thus, the credit score of the borrower or his past payment history does not hold any relevance while taking a gold loan. This is beneficial for people with a poor credit score or no credit history. You can repay the gold loan in a disciplined and timely way to improve your credit score.
- No restriction on end-use of the loan amount: Unlike other loans like a housing loan or a bike loan, there is no restriction on how the borrower uses the loan amount. The borrower can use the money on one or multiple requirements unrestrictedly, as long as it is on legal activities.
- Safety of the pledged gold: The gold a customer pledges with the lender is kept in secure vaults which are under constant surveillance. The borrower can rest assured of the safety of his precious ornaments and once he has paid back the loan and interest amount, he can take his gold possessions back. This also saves him from bank locker charges and the stress of keeping the gold safe with him
A gold loan comes with several benefits for the borrowers. Avail a gold loan from Muthoot FinCorp for additional benefits like cash backs and low-interest rates and processing fees.