For centuries, India has regarded gold as a symbol of pride and prosperity.
Indian homemakers have approximately 11% of the actual amount of gold present globally.
In Indian households, gold is transferred from one generation to another as an inheritance and holds monetary and sentimental value.
There has been a shift in how Indians use their gold. People are using their gold reserves to get surplus funds in the form of gold loans to fulfil their financial obligations.
Several people take a gold loan these days at a low gold loan interest rate for a variety of purposes like meeting an urgent business requirement or planning a destination wedding.
Top 5 Things to Consider Before Obtaining a Gold Loan
Customers can keep a few things in mind to make the right decision before taking a loan against gold.
- The principal loan amount: The amount of the gold loan depends on the value of the gold the customer pledges. Gold prices keep fluctuating, and therefore the value of the pledged gold also keeps fluctuating. Some lenders take the current value of gold for calculations while others take the average of the last two week’s gold price. Customers can choose the plan that suits them the best.
Muthoot FinCorp offers a high LTV of up to 75% of the pledged gold’s value to the customers and uses the average price of 22 karat gold over the last 30 days for valuation.
- Gold loan interest rate: Interest rates determine the cost of the loan for the borrower. Gold loan interest rates are comparatively lower than other loans like personal loans. Muthoot FinCorp offers gold loans starting at only 11.99% under various gold loan schemes.
- Loan duration: A loan against gold is usually a short-term loan, and people use it to meet their immediate cash requirements. It is crucial to ascertain that you can pay back the loan amount by the end of the loan tenure to avoid losing your gold possessions kept as collateral.
- Repayment of the gold loan: The repayment structure of gold loans is flexible compared to other loans. Customers have the flexibility to pay only the interest amount during the loan’s duration. They can pay the principal loan amount at the time of closing the loan. It makes repayment easy for people who have a temporary cash crunch. Muthoot FinCorp offers a bullet payment facility to its customers, further easing the repayment structure of a loan against gold.
- The lender’s credibility: There are various platforms to get a loan against gold. However, local jewellers may not do the required paperwork while giving a gold loan. There is no guarantee of the valuation process that local jewellers use. A reputed jeweller has a more reliable gold loan process. Additionally, they keep the borrower’s gold possessions with complete safety and security. It is a relief to the gold loan borrower.
Conclusion
Keeping these points in mind, one can make a better decision while taking a gold loan. Muthoot FinCorp offers low-interest gold loans with minimum documentation and easy eligibility criteria for the borrowers.
