Gold serves as a protection against volatility and hedge against inflation. It is used as a savings instrument as well as collateral against borrowing. It has emerged as a reliable source of credit for households around the country. Those who have accumulated gold over several years can apply for gold loans offered at better terms than non-institutional credit and personal loans comparatively. Therefore, gold loans have emerged as one of the most convenient ways to address any financial crisis.
The demand for gold loans has spiked recently, and the impacts of the current pandemic on earnings and sources of income can be considered the primary reason for increased demand. It is easy, quick, and hassle-free disbursal has added to its popularity.
Benefits that Make Gold Finance the Best Alternative Source of Credit
The gold loan market has been an alternative source of credit for a long time now. Following are benefits and factors that make it the best alternative, especially for low-income households:
No credit history is required
The eligibility criteria to apply for a gold loan is easy to meet. You can get gold loans without a credit history. It is not easy for a low-income household to get a loan. It results in no credit history and a low credit score. There are high chances that a loan application gets cancelled without a credit history. In the case of gold loans, a low-income household can easily get the finance regardless of what the credit history says. A person aged between 21 – 65 years can apply for a loan against gold.
Get gold loans sanctioned without income proof
Gold loan applications need not be accompanied by your income proof, unlike unsecured loans. The gold loan is sanctioned based on the value of pledged gold solely. You should consider that if you cannot repay the loan, the lender can forfeit/sell the pledged gold articles to recover the loan amount.
A lower interest rate is charged
Since a gold loan provides collateral to the lending institution, it offers affordable interest rates to the borrower. Gold loan interest rate is not based on the borrower’s profile, but it is based on selected loan schemes. Muthoot FinCorp‘s gold loans start at just 6.99%.
Free of foreclosure charges, unlike other loans
It is one of the most advantageous features of gold finance. Gold loans come with flexible repayment tenures. Reputed lenders like Muthoot FinCorp do not levy foreclosure charges. You can repay the loan before the closing date whenever you get a significant bonus or appraisal. You can decide to repay the entire loan after three months of loan disbursal without incurring any prepayment penalty.
Low or negligible processing fees
Most individuals applying for a loan consider the interest rates but forget to consider the processing fee. It is applicable to most loans. Gold loans are free from high processing fees. There will be no or minimal processing fee, as low as Rs. 20 inclusive of GST. It depends on the chosen gold finance scheme.
High loan amount
Gold loans offer a high Loan To Value (LTV) ratio. It can provide a high loan amount of 75-80% of the gold value. You can repay the loan in easy EMIs during the repayment term. Make sure the purity of gold to be pledged should be between 18 to 24 carats.
No restriction to end use of funds
You need not apply for different loans for different financial needs. Borrowers are free to use the gold loan credit as per their needs at a point in time. A gold loan is a convenient solution if there is a monetary crunch.
Choose from a variety of budget-friendly gold loans
Financial needs differ from person to person at different life-stages. Trusted lending institutions,like Muthoot FinCorp, understand the needs of each individual and offer them need-based gold finance schemes.
Thus, individuals with low income can meet their financial needs through convenient gold loans. Get ready to get a Gold Loan From Home. Receive money anytime and anywhere.