gold loan

5 Simple Steps to Secure a Gold Loan

There is nothing better than pure gold to feel secure on a rainy day. Yes, that is what most Indians believe. In 2018, Indians purchased over 760 tonnes of gold. The gold demand during April-June this year rose by 13% to 213.2 tonnes. And, even a tiny bit of gold can go a long way in meeting your needs during emergencies. For example, a single gram of gold in 2019 can secure you a loan of about Rs. 2500.

Moreover, ten grams of gold can raise the stakes to Rs. 38,000. Though this loan amount varies upon Loan to value and can vary from time to time depending upon the current rate of gold.  Perhaps, there is no other investment that converts nearly 75% of its value when you need it. Moreover, growing competition among lenders is making way for attractive interest rates on loans against gold in recent times. 

Below are five simple steps to secure a gold loan today. 

  1. Quality of Gold 

Usually, cash for gold works best when you have a high-quality gold asset in your jewellery box. Generally, 18-22 carat are sufficient for availing loans. For 18 carrot jewellery, you can get up to 60% in cash when required. For 22 carat gold, you can avail up to 75% of its value as required. 

  1. Type of Gold 

If you are planning to avail of a gold loan in the future, you need to give serious thought to the kind of gold you buy. jewellery shines bright during family functions but is not as attractive to lenders as coins or bars. Your repayment capacity will also play a role in the cash for gold disbursal. However, coins are likely to ring louder in most cases. 

  1. Documentation 

Documentation is an essential part of the agreement, both for your safety and for the security of the lender. This part of the process has become a lot easier in recent times. Nowadays, you can apply online for a gold loan or visit the branch directly with your KYC documents. 

  1. Gold Deposit

Depositing your shiny gold jewellery can seem like an emotional hurricane to some. However, you will be needed to collect your gold once an agreement between you and the lender is final. You will typically get 7 days to 36 months to repay a loan, but some NBFCs offer customized repayment options which differ lender to lender and your disbursal of the loan will usually happen within an hour, at most. Some NBFCs offer gold loan at competitive interest rates, starting from as low as 12% with nominal processing fees ranging from Rs.15 to Rs. 20. These can seem expensive to begin with based on their interest rates. But hey, what’s the cost of not letting your wife wear her favourite jewellery at her sister’s wedding? 

  1. Charges 

Gold loans are quick ways to greet an emergency, and this can cost you a bit in upfront payments. Usually, gold loans come with a 0.25% to 1% fee for processing. This fee plus GST is an essential part of the total loan eligibility. The 1% is part of the total amount approved to you for disbursal. If you are new to a financial lender, despite your big stash of gold, you may get only Rs. 25 lakhs in total. 

If you are looking for the best interest rates on gold loans and the most trusted name in the gold business, you can consider looking at gold loan schemes from Muthoot Fincorp.

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