A gold loan is a secured mode of finance in which an individual pledges the gold jewellery as collateral with a gold loan company. The financial institution grants a loan amount to the borrower as per the market value of gold. Availing of a gold loan is quite simple and secured. In India, many people pledge their gold ornaments to the lenders to meet an emergency fund requirement.
Here’s a list of some common questions with expert answers regarding a gold loan.
1. What is a gold loan?
A gold loan is sanctioned when you give gold items such as ornaments, coins, and bars as security to the lender. You need to repay the loan in instalments. After repaying the loan, including the interest amount, you will get your gold items back.
You can avail of gold loans from topmost lenders in the country. The interest rate on your gold loan ranges from 13% to 16%. You can avail of a gold loan to meet a short-term fund requirement such as a medical emergency, child’s education, wedding, etc.
2. Who can apply for an online gold loan?
If you are a businessman, trader, salaried employee, self-employed individual, or farmer, then you can easily apply for a gold loan. The age range varies from one lender to another. However, you can get a loan against gold if you are between 18 and 60 years of age.
3. What are the reasons for applying for a Gold Loan?
Some reasons to apply for Muthoot gold loan online are mentioned below:
- When you need instant funds for a shorter period
- In case you want to avoid tedious documentation as gold loan requires primary KYC documents
- If you have gold jewellery that you are ready to pledge
- There is no pre-payment penalty in a gold loan, which decreases the overall cost of the loan
- No CIBIL Score is required
4. How is EMI calculated on Gold loan?
It is quite simple to determine your Gold loan EMI’s using an online Gold Loan EMI calculator. There are higher chances of errors when doing it manually. Hence, it is more reliable to use an online EMI calculator.
5. What is Gold Loan EMI Calculator?
EMI is the amount you need to pay each month to a financial institution from which you have availed the loan. EMI amount involves both the principal amount and the interest component. With Muthoot Gold Loan interest rate calculator, you can get an estimate of your monthly EMIs for a particular tenure at a given interest rate. Your EMI depends on the loan amount, loan tenure and the interest rate.
6. What type of gold can I pledge?
All gold items can be used as collateral for availing of the gold loan. The pureness of the gold will determine the loan amount. For example, coins and gold bars have more value as they come with higher purity. In the case of gold jewellery studded with precious gems, only the value of the gold part is considered.
Say, you have 20-karat gold ornaments in which 10 grams is pure gold, and 4 grams is made up of gems, silver, etc. When estimating the ornaments for a gold loan, the value of only 10 grams of pure gold will be considered.
7. How can I avail of a loan against gold?
To avail of a gold loan, you are required to take your gold items to the lender. Then, the purity of the gold is determined, which creates the basis of the loan amount. The market price of the gold is then reviewed, and the loan gets sanctioned.
8. What documents are needed to apply for a loan against gold?
The documents required when applying for a gold loan are mentioned below:
- Applicant’s Address Proof
- Gold loan application form to be duly filled by the applicant
- Identity Proof/ Pan Card/Aadhar Card
9. What happens if you default on a gold loan?
Defaulting the gold loan will negatively affect your credit score. The lender bank will also report it to the credit bureaus, which will drop your credit score.
10. Is my gold safe with the lender?
Lenders keep your jewellery safe in a strong vault guarded under 24×7 CCTV cameras surveillance. Some lenders provide insurance towards the gold pledged to them, protecting it against theft. You will still get back a value equivalent to the gold’s market rate in case of a burglary.
You can refer to the above-guide when you are planning to avail of a gold loan