Blog #Gold Loan Per Gram

Gold has more than just monetary value in our country. It is considered a status symbol. A precious metal with which people have an emotional attachment. People usually take a gold loan to fulfil their urgent need of funds may it be for any emergency purpose or leisure. In a gold loan, the borrower pledges some gold at the bank or the NBFC and in return gets a loan of a certain value. The repayment of the loan is bound to the tenure chosen by the borrower and is paid in EMI’s ( Equated Monthly Instalment). The profit of the bank in giving out the loan is the interest that it charges on the loan. The monthly EMI is a mixture of loan principal amount and interest. The central bureau maintains a record of each EMI paid and the borrower’s payback pattern. 

Not many people know but each timely payment of EMI contributes to their credit score and also each default in payment. CIBIL score is an important factor that lending institutes consider while offering any loan. In the case of a gold loan cibil score of the borrower is not the priority so even an average score would do just fine. This is because the loan is secured by pledging gold to the institute.  

An individual doesn’t need a good credit score to avail of a gold loan but their availing of a gold loan improves their credit score. The timely repayment of the gold loan EMI’s contributes to the growth of credit score. These days Gold Loan Per Gram is an offering by most lenders. Under this scheme amounts as low as the equivalent of 1gm gold can be availed. This scheme enables people with a low financial background to also avail themselves of gold loans. A credit score is calculated by taking into consideration of four factors. They are as followed:-

• Credit history - Your old credit repayment behavior is analyzed. Default in payment of EMI on time could impact your credit score.
• Total Debt - This takes into consideration your total debt to income ratio. The rising debt could impact the growth of your credit score.
• The balance between secured and unsecured loan - A proper balance between secured and unsecured loan has to be maintained. Too much of either could be bad in long run.
• Frequent Enquiries - Too many credit score enquiries could have a negative impact on your credit score.

Thus these are the factors considered while the bureau calculates an individuals credit score. Gold loan offered by various lending institutes at varying rate of interests. Muthoot Finance Gold Loan is an offering by a pioneer in this field. Interest rates starting at just 12% per annum. It is one of the only few to provide gold loans of a lower limit of 1500 rupees only with no upper limit. They also provide a flexible repayment system with tenure of the loan ranging from 7 days to 36 months. The best part being no foreclosure charges meaning that the loan can be settled before its maturity at no extra cost. This makes the bank and its offering flexible and user friendly. Therefore gold loan can contribute to the growth and fall of your cibil score but when used wisely it will contribute to your credit score which will make it easier for you to avail any type of loan at better offers. 

Conclusion: CIBIL score has its importance but the majorly in unsecured loans segment. In gold loan collateral is involved therefore the need for a good credit score is not a priority but on the other hand, the gold loan repayment will make your credit score strong and that has many benefits.

Also read this: Is it Safe for me When we Avail of the Gold Loan? 

Gold loans square measure short loans and therefore the reimbursement amount will vary from one month to many years. If you're in would like cash for immediate expenses and expect to be able to pay it back within the short term, then this sort of loan could be a decent possibility.

What square measures the benefits of a gold loan?

Lower charge per unit on gold loans: Normally, interest rates on these loans square measure below on personal loans since this is often a comparatively low-risk loan for lenders as they hold your gold as collateral. The charge per unit additionally varies reckoning on what proportion you wish to borrow about the whole price of the gold you have got pledged. The interest rates square measure lower once the loan quantity isn't quite 50-60% of the whole price of the gold pledged. However, if the quantity borrowed is high as compared to the worth of the gold, the charge per unit are correspondingly higher. As an example, if you pledge Rs. 1,00,000 price of jewelry associate degree borrow a quantity of Rs.50,000 you'll get a stronger (lower) charge per unit on a gold loan than if you pledge a similar price of gold however need to borrow Rs.70,000.

Everybody wants lower interest on their loan facility. A gold loan can be the most suitable option for you as this is a secured loan and lenders use it to charge lower interest rates. It will cost around ₹2,632 to ₹3,217 Gold Loan Per Gram. Moreover, you can get much lower interest rates already have a good relationship with the bank.

Quick process: In India, gold loans square measure a number of the fastest loans to be sanctioned because the banks have your gold as security just in case of default, removing the necessity for checks on credit scores or reports. The loan will be approved, over the counter, in a very matter of minutes or simply many hours. Several lenders will have your gold valued quickly and sanction the loan forthwith, once verification of the purity and price of the gold.

No financial gain proof required: In several cases, you're not even needed to submit an earnings certificate since your gold is a command as security by the loaner. So, though you're presently idle or don't have a decent credit score, you'll still be eligible for this type of loan. However, it's potential that some lenders would possibly elicit an earnings certificate for loans on top of an exact quantity.

Things to stay in mind before preferring a gold loan:

Emotional issue: Gold as an associate degree quality has an emotional price in India since it's mostly within the kind of family jewelry. Gold as collateral means you run the danger of losing your family jewelry just in case you're unable to repay the loan. This will cause undue mental and emotional pressure not simply on the receiver, however, the whole family. Thus think twice if you'll be able to pay back the loan fully before you apply. It's smart to possess well-tried data for constructing loan repayments so you're assured regarding your ability to recover your gold.

Quality of lender: There square measure many NBF Cs within the country United Nations agency supply enticing terms for these loans. However, a number of them might be poorly run and will probably close up hastily going away you at a loss. It's vital to check the varied lenders and opt for one that features a smart name. Additionally to those NBF Cs, many nationalized and personal banks supply Gold Loan.

Quality of gold: Solely gold of 18K price and on top of is accepted by lenders. You furthermore may have to be compelled to be on top of twenty-one years older to use for this sort of loan.

What is Gold Loan?

A gold loan is a loan acquired by keeping one’s gold valuables mortgage towards banks or NBFCs on the value of gold weighs as Gold Loan Per Gram. This loan is a short term secured loan involving collateral. Since 1991, bank and Non-banking Financial Institutions(NBFCs) have started lending loan on gold with less incurred interest rates. This is the only loan that can get approved in less duration of time.

Eligibility Parameters of Gold Loan: There are specific parameters specified by the lending institutions or banks which one has to abide by for availing this loan:

1. The creditor must be of legal age while submitting a loan application.

2. The creditor must be an Indian citizen.

3. A CIBIL Score of 700 or above is requested.

4. The mortgage gold should weigh above 18 carats to avail loan.

The creditor can check his/her eligibility for a loan using the eligibility calculator.

Gold Loan Schemes: There are multiple schemes given to the creditor to avail loan according to their purpose such as:

Gold Loan for Agricultural purposes: This loan can only be availed by farmers or agricultural laborer's against submitting proof of farming land. These loan purposes should be restricted to farming-related activities only. The repayment is due after the yield of crops in this loan scheme.

Gold Loan for Non-agricultural purposes: This loan can be acquired by salaried individuals, businesspeople, homemakers, self-employed individuals, traders, etc., for the purposes like wedding, home construction or renovation, travel purposes, funding education, medical emergencies or financial crisis.

Application Process: The application for a gold loan can be submitted online through the official website of ICICI or app and offline modes by visiting the nearest ICICI bank branch. The offline method is relatively better than online as there are fewer chances of error. Any wrong transactions can lead to financial loss or discrepancy. In offline, one has to visit the bank to complete the application process with required documents and thus has fewer chances of discrepancy. The bank representative will guides you through the whole loan process and solve any queries relating to it. An appointment is scheduled for gold’s purity test, and if you have mortgage gold with you, it is scheduled at that instant after completing the document verification process.

Document Verification Process: The creditor has to submit proof of genuineness where the banks request only KYC documents and two photographs. An identity proof where Aadhar card, Driving license, Voter ID, Passport and residence proof where utility bills, Aadhar card, Passport, Ration Card, Renters agreement can be submitted. A background check is conducted by bank authorities to omit the chances of fraud or forgery.

Purity Test of Gold: The most important step on which the loan approval depends is the purity test. For this test, the creditor has to visit the bank as it is conducted only on bank premises by bank authorities. The gold is assessed for its purity, and impurities present it where its weight the composition is taken into consideration. The loan amount depends on the analysis of this test as per the loan to value ratio. This test is conducted at the scheduled time where the creditor has to come along with the gold, which must be kept as a mortgage. The loan is approved in a short while after this process.

Safety of Gold: The gold is kept mortgage towards the bank by a creditor. This gold has to be analyzed before keeping it as collateral. This gold is sealed in the bag marked with a unique application number to the creditor and stored in bank lockers. The application number is the same as mentioned in the approval letter issued to the creditor on approval of the loan. The bank lockers are present inside a vault in the bank. These vaults are guarded, and security cameras are deployed inside them. The entry inside this vault is restricted only to the bank employees. The approval letter should be kept preserve by the creditor until the end of the tenure period of the ICICI Gold Loan.
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