The basics of a gold loanThe basics of a gold loan

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A gold loan is basically what the term A gold loan is basically what the term suggests a loan against gold. It is an over suggests a loan against gold. It is an over the counter product that gives customer the counter product that gives customer easy liquidity, with no processing time or easy liquidity, with no processing time or documentation. documentation.

It is the fastest way to avail of cash. It is the fastest way to avail of cash. Customers can approach any NBFC like Customers can approach any NBFC like Muthoot Fincorp or banks like State bank Muthoot Fincorp or banks like State bank of India for these easy loans. Gold of India for these easy loans. Gold ornaments, coins, bars, and even ETF’s ornaments, coins, bars, and even ETF’s can be pledged for cash. can be pledged for cash.

This loan product is focused on being This loan product is focused on being hassle free and the end use of the liquidity hassle free and the end use of the liquidity is not monitored, hence the customer has is not monitored, hence the customer has the freedom to put it to any use. Usually the freedom to put it to any use. Usually 70%- 80% of the value of the gold is 70%- 80% of the value of the gold is offered as a loan and on full repayment of offered as a loan and on full repayment of the loan, the gold is returned to the the loan, the gold is returned to the customer. customer.

The rate of interest charged is between The rate of interest charged is between 11.5% to 24% per annum. Some NBFC’s 11.5% to 24% per annum. Some NBFC’s like Muthoot Fincorp has a flexibility plan like Muthoot Fincorp has a flexibility plan where a remarkably low rate of interest is where a remarkably low rate of interest is charged if the gold is redeemed within a charged if the gold is redeemed within a month and the interest charged is hiked on month and the interest charged is hiked on a scale, depending on the term of a scale, depending on the term of repayment.repayment.

   

What makes gold loans an attractive What makes gold loans an attractive option is the speed at which it can be option is the speed at which it can be availed. NBFC’s like Muthoot Fincorp availed. NBFC’s like Muthoot Fincorp boast of sanctioning a loan in just 3 boast of sanctioning a loan in just 3 minutes. Their Express 3 Minute Gold minutes. Their Express 3 Minute Gold Loan product is very popular. others have Loan product is very popular. others have 5 minute plans and so on. 5 minute plans and so on.

Gold loans are also a convenient method Gold loans are also a convenient method to arrange funds, especially when Indian to arrange funds, especially when Indian families posses a lot of gold. There are no families posses a lot of gold. There are no pre payment charges, processing charges pre payment charges, processing charges for this type of loan; hence gold loans are for this type of loan; hence gold loans are very attractive. very attractive.

Yet another incentive in availing of a gold Yet another incentive in availing of a gold loan is that there is no minimum amount loan is that there is no minimum amount specified. Loans as small as Rs 1000/- specified. Loans as small as Rs 1000/- can be availed. There is no upper limit too, can be availed. There is no upper limit too, making it attractive to traders and making it attractive to traders and corporates.corporates.

There are basically four steps to availing a There are basically four steps to availing a gold loan:gold loan:

Loan Valuation:Loan Valuation: The bank or NBFC The bank or NBFC values the gold based on certain values the gold based on certain parameters which determine the loan parameters which determine the loan eligibility and amount. eligibility and amount.

Documentation:Documentation: There is minimum There is minimum documentation at NBFC’s like Muthoot documentation at NBFC’s like Muthoot Fincorp, where an address proof will Fincorp, where an address proof will suffice. While at banks a photo id and suffice. While at banks a photo id and address proof might be needed. address proof might be needed.

Agreement:Agreement: An agreement will be signed by the An agreement will be signed by the borrower agreeing to the terms and conditions of borrower agreeing to the terms and conditions of the gold loanthe gold loan

Disbursement:Disbursement: The loan will be disbursed either The loan will be disbursed either as cash or cheque to the applicant, over the as cash or cheque to the applicant, over the counter immediatelycounter immediately

Thus availing a gold loan is an easy, Thus availing a gold loan is an easy, hassle free way to easy cash, the process hassle free way to easy cash, the process taking only a minimum of 3 minutes or taking only a minimum of 3 minutes or maximum of 30 minutes.maximum of 30 minutes.

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