In India, the concept of pledging gold assets to borrow money has always existed. In earlier times, people used to keep their gold ornaments as collateral with traditional moneylenders. Although over the years the process has changed quite a bit, gold loans are still considered to be one of the best options to get over a temporary cash crunch. Today, there are a number of financial entities (banks and NBFCs) that offer quick and hassle-free gold loans at the most competitive interest rates.
Here are 7 main advantages of taking a gold loan:
- Lower Interest Rates
The rate of interest applicable on a gold loan is quite competitive. This is because a gold loan is a secured loan, where the borrower pledges gold as collateral for availing the loan. As the risk involved for the lender is relatively lower as compared to other financial solutions like personal loans, the interest rate is also quite affordable.
- Simple Application Process
As compared to other popular financing options, gold loans have an easier and more convenient application process, which involves minimal documentation. This is also one of the reasons behind the quick turnaround time for gold loan applications, making gold loans the ideal option for situations when you are in urgent need of funds. In fact, with services like Gold Loan @ Home by Muthoot Finance, you can apply for a gold loan, get the gold valuation done, and get the loan disbursed from the comfort of your home.
- Easy Eligibility
Another major advantage of taking a gold loan is flexible eligibility. Since it is a secured loan where your ornaments are used as collateral, the purity and weight of the gold remain the most important factor. Any Indian resident who is over the age of 21 can use their gold assets (jewellery, ornaments, etc.) to get a gold loan.
- High Loan-to-Value Ratio
The LTV, or loan-to-value ratio, for gold loans, is higher as compared to other types of loans. The higher the loan-to-value ratio, the higher the amount you can avail as a loan. At present, based on RBI guidelines, you can avail up to 90% of the value of your gold as a loan.
- No Restriction on End-Use of Funds
Another important benefit is that gold loans come with complete flexibility in terms of the end-use of the funds. Unlike other finance solutions, there are no restrictions on the end-use of the loan amount. You can use that money for any purpose, such as educational expenses, medical treatment, business operations, travel, home renovation, marriage, etc.
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Flexible Repayment Options
Gold loans generally come with flexible repayment options that you can choose from. For example, when you opt for the Gold Loan @ Home Service by Muthoot Finance, you can choose from the flexible repayment options and when the time comes, you can pay the gold loan off online. Muthoot Finance offers flexible online payment methods, of which the Muthoot gold loan pay Finance Quick service for gold loans provides the most convenience.
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Security of Pledged Ornaments
While availing a gold loan, you don’t have to worry about the safety of the assets you pledge either. All ornaments and gold are stored in a secure vault for the entire duration of the loan tenure and with free Insurance for the pledged gold.
Given all these advantages, it is easy to see why gold loans are the best option to get over a financial crisis. Further, with Muthoot Finance’s Loan @ Home service, you can avail a gold loan at the best interest rates from the comfort of your home as well.