Blog #Muthoot Gold Loan

Gold is used by the majority of India's 80 per cent population. If a crisis or emergency develops, most people's gold is readily available, allowing them to receive immediate aid as well as financial advice from any bank or financial institution. There are a few distinguishing characteristics that set it apart from other types of loans.  The factor is the valuation of the gold immediately taking the gold to the particular bank, or any financial institution does not mean that will get the amount of the loan on the whole of the amount of the gold. Then we'll have a reservation of the gold done by the institution or the bank. About 90% of the value of the gold can be available as a loan. Until the valuation of the gold is done, the person can't be clear or have clarity on how long at what particular time one will need to pay. Muthoot gold loan is providing gold loans at the rate of 12 % per annum to 27% per annum.

Gold's value has increased faster than stock markets on several occasions, and it has even been able to outperform the economies of some of the world's most influential and stable nations. If you need money quickly, there are several options open to you. People frequently consider taking out short-term loans or even selling property to obtain liquid assets. Few people, however, want to sell gold for cash because it is an asset whose value is projected to appreciate over time The credit score is a credit rating score of a person who is availing of any financial assistance from any bank or any financial institution. It is said that if the credit score of any particular person is around 700, then the chances of getting a loan or even the chances of getting a gold loan are much higher. If the amount after proper time there is no issue of negative credit score but will have a positive credit score instead. 

On the contrary of the fact if someone is having a credit score below 650 or 600, one needs to avail of the small amount of gold loan accordingly at the proper time. In this way, the credit score not only will be improving but also if somebody has no credit score or not a single transaction of any credit is there then also can make some credit score. The lender is always safe if they have some collateral, and they do not need any formal statement of income. The borrower believes that they must repay the loan amount and that if they do not, the lender will seize the borrower's valuable possessions. He makes every effort to pay this EMI on time to reclaim his possessions on time. Before offering you a loan, a lender wants to be sure you'll be able to return it. As a result, many of them need to be protected in some way. Collateral is a sort of security that helps lenders lower their risk. It makes sure that the borrower honours their financial responsibilities. If the borrower defaults, the lender has the option of seizing and selling the collateral, with the revenues going toward the loan's unpaid balance. Gold Loan per gram is based on the total weight of the gold jewellery (except the stones on the piece), level of the gold purity, the preceding one-month average price of 22-carat gold and LTV ratio applied by banks and this is calculated by the gold loan calculator.

Finally, gold loans offer a variety of advantages, including low-interest rates and tax advantages. When a person takes out a gold loan for house repairs, he has the option of taking advantage of income tax restrictions.

Read More:- Spike in Demand of a Gold Loan 

A Gold Loan is the best option for a financial need and crisis. The loan is secured and offers excellent deals. However, a gold loan has multiple features that require adequate research and knowledge before availing one.

What is a gold loan, and How does it work?

Banks and Non-Banking Financial Companies(NBFCs)  provide loans to customers upon receiving gold asset(s) collateral. And thus, a gold loan is secured and has maximum protection. A gold loan is a general-purpose loan, where the bank or the financial institute doesn’t raise questions on a borrower’s reason for availing. Therefore it can be used for any and all reasons. Medical emergencies, inexplicable financial crises, educational needs, home renovation, construction, business reasons, vacations, weddings, technological and electronic gadgets, machinery purchase, the list goes on forever. No matter how big or small the value of reason is, a gold loan is present to help you. Upon pledging the gold asset, the value of the gold is determined based on its purity and weight of the gold. And the loan amount is granted for a certain period. The borrower needs to pay back the owed amount with interest by the end of the tenure. The loan can be availed both online and offline conveniently.

Gold loan features:-

• Easy Processing:- Compared to most other loans, a gold loan has the most convenient and flexible processing. This is because a gold loan only requires the minimum amount of documents. With two photocopies, a valid id proof such as a PAN card, Voter Id, Aadhar Card, Driving License or Passport, and Gold article(s), you can avail of the loan within several hours.
  
  
• Swift Accessibility:- A gold loan can be availed both in online and offline modes. In the conventional face-to-face way, you can just walk into the bank or NBFC and submit the required documents with collateral, and the loan amount is disbursed on the spot. However, upon choosing the online mode, you have to fill an application form and upload the required documents in addition to the required loan details. After the application submission, the bank or financial company calls you for further processing. Both the methods are effortless and have proved to be extremely beneficial over the years.
  
  
• Loan Amount:- The loan amount sanctioned is based on the value of the gold. The purity of the gold is required to be in the range of 18 carats and 24 carats. Authorized lenders don’t accept gold with purity less than 18k. The higher the purity of the gold, the higher the loan amount granted. The weight of the gold must be a minimum of 10gm in a few banks and NBFCs, but most other lenders accept gold of any weight. The gold loan per gram for most banks lies in the range of RS 3,506 and RS 4,621.The loan to value ratio is up to 90%, so if the value of the gold asset pledged is RS 1 lakh, the amount sanctioned is a maximum of RS 90 thousand.
  
  
• Loan Term:- The period the loan is granted for is known as loan term or tenure. The gold loan tenure varies from 3 months to 36 months. The interest amount has to be paid till the end of the chosen tenure. Therefore, choosing the tenure you can afford is primary. Generally, a long tenure has a low interest rate, and a short tenure has a high interest rate.
  
  
• Interest Rate:- The interest rate is a percentage of the loan amount availed. The interest rate is a primary aspect of the loan and needs to be paid on time without default. As the loan is secured, the bank or NBFC has the right to auction your gold if you as a borrower don’t pay interest amount continuously for more than three months. The interest rate of a gold loan is extremely minimal compared to other loans and starts from 7% per annum.
  
  
• The Processing Fee and Preclosure Charges:- Banks and NBFCs charge fees for the processing and approving loans. The gold loan processing fee is NIL in most banks and NBFCs, but some charge a rate of 1% of the loan amount. The Preclosure Charge or the prepayment charge is incurred if the borrower wishes to close the loan account sooner than the end of tenure.
  
  

• Conclusion:-

  Muthoot gold loan is a highly renowned gold loan with the best deals and offers in the market. The financing company often introduces various schemes on gold loans for its customers. The financial institute is highly reliable and trustworthy.

Also Read:- Is Gold Loan the best option? 

There was a sudden change in gold rates during mid-may 2020, which also marks the start of the COVID-19 lockdown in India. The gold rates fluctuate at high speed. This also encouraged India to give up their gold pieces as collateral for money, to meet their current financial needs. Due to Covid-19 a lot of people lost their jobs and had to take loans to meet their everyday needs. And a gold loan was the best option when compared to a personal loan or credit card. Because for a gold loan, the interest rate is usually low, but during the lockdown, it has decreased a lot, the application process is a lot quicker, and you only need essential minimal documents. Whereas the interest rate and application process for a personal loan are pretty high.

You can quickly get money by giving your gold as collateral to banks and Non-banking financial companies(NBFCs). But due to this pandemic, a lot of factors of the gold loan were affected, and those factors are:-

1. LTV rate :- Loan to Value rate is the rate you get when you give your gold as collateral; earlier the LTV rate was 75-80%, so if your gold rate is INR 45000 so you would only get 33,750, but now RBI has increased the LTV rate to 90% so now you’ll get 40,500 for your gold. But no bank gives a 100% LTV rate. 

2. Interest rate :- The interest rate has decreased a lot. It was 8.50% before, but some banks like Muthoot gold loan are giving loans at 7%, well a lot of banks are giving loans at 7% now, but you’ll have to do your research and compare each factor to find your perfect lender.

3. Tenure :- Due to this pandemic, the country is facing financial issues, so many people cannot pay the whole principal amount with interest, so that’s why banks have decided to increase the period to pay back the amount. Due to which banks are forced to invest more in security equipment like CCTV cameras, Biometric scanners, Strong doors and alarms.

4. Repayment :- Banks have allowed flexible payment due to this pandemic. You can pay annually, quarterly, semi-yearly or you can pay interest every month and the principal amount at the end.

Reasons to apply for a gold loan during COVID-19:-

1. Minimum documents required, and the process is quite fast.

2. It is the most secured loan when compared to a personal loan.

3.  The money is not being monitored; once you get the money, you have the flexibility to use it however you want.

4.  You are not asked for other collateral or security, but if you want to lower your interest rate, you can add any other asset for collateral.

5. The interest rate is quite low.

6. Gold loan is the perfect way to raise capital and use funds whenever you're in need for money.

Now the real question is how can you apply for a gold loan:-

1. You can request a door step evaluation for your gold. When you request this, a bank executive will visit your home to check the gold value and decide on the rate. And if you both agree with the credit amount, you can go ahead with it and provide all the minimum documents required. The money is then transferred to the customers account shortly.

2. You can visit a bank branch and have a conversation with the bank manager regarding the interest rate, repayment options, LTV rate and tenure. And if you both agree with the terms, you can move ahead with it. Customers usually get the money on the spot.

3. You can apply for a gold loan online, where the process is straightforward compared to the offline method, and then you can move ahead with it.