Index Of The Blog
Gold is one of the most preferred commodities for Indians when it comes to saving for the future. Indians are known to be sitting on the highest amount of gold saved in their households. Most of this gold is in the form of jewelry. Recently, gold has gone under a drastic transformation from being an instrument for savings to a financial instrument for credit. With big financial institutions, like Muthoot FinCorp, providing easy gold loans at great rates of interest, the demand for gold loans has soared in the past few years. The year 2020 has also witnessed a steep rise in the price of gold. This has also motivated people to put their idle gold to some good use and raise capital for their financial milestones.
Gold loans are easily available today. Financial institutions are ready to give loans based on the market value of gold. Since a gold loan is an inherently secured loan as gold acts as collateral for the agreement, the rate of interest for Muthoot gold loan is also very low. You can use a gold loan calculator online to calculate the amount of gold loan you can avail of and the EMI that you have to pay. In this article, we will discuss the key aspects of a gold loan that everyone should be aware of before taking a gold loan.
Key Aspects of Gold Loan that You Should be Aware of
1. Rate of Interest
The rate of interest for a gold loan is much lower than any other loan instrument. Gold is one of the safest assets to put as collateral against a loan. Hence, financial institutions are ready to give loans at a lower rate of interest. This makes gold loans an easy and cheaper way to raise capital at lower rates of interest as compared to personal loans where the rate of interest is comparatively higher. Make sure to compare different rates of interest being offered by financial institutions using a gold loan calculator before you apply for a loan against gold.
2. Trusted Financial Institution
The physical gold that you put as collateral is deposited at the lender. Make sure that you take a loan from a credible lender. Always focus on big names like Muthoot FinCorp who are trusted in the financial markets. Credible lenders will also fairly price your asset and will be able to process your loan smoothly. Credible financial institutions will also be able to provide better customer service which can prove to be vital in the later stages of repayment.
3. Amount of Loan
Most people think that they can get an exact amount as a loan as the market value of the gold that they deposit. However, this is not true. Gold loans cover up to 60 to 75 percentage of the entire market value of the gold that you put up with the lender. This extra margin is kept as a safety against the volatility in prices of gold in the future. Hence, when you are planning to take a gold loan, make sure to keep this point in mind. You can use a gold loan calculator to check the amount of loan you can get.
4. Tenure
Gold loans are offered for a shorter period as compared to other secured loans. Generally, gold loans are offered for a tenure of 12 to 14 months. Make sure to repay the entire amount within this tenure to retrieve the gold that you have deposited with the lender.
5. Repayment of Loan
Since there is a lesser amount of risk associated with gold loans, lenders can be more flexible with the modes of repayment. Make sure to discuss the same with your lender when you negotiating the modes of payment.
Conclusion
Gold loans are one of the best ways to raise instant capital. It is secured in nature and hence, the rate of interest is also very low. So the next time you have a financial crunch, don’t let your gold sit idle. Put your asset to some good use and raise some extra capital for yourself. You can then use this capital for either mitigating a financial crisis or taking the next big financial step of your life.
