A gold loan is a secured loan where you can access easy cash by mortgaging your gold. Various lenders provide loans against gold at an affordable interest rate. Manappuram gold loan is one of the gold loans which provide amazing benefits with budget-friendly interest rates.
Benefits of Gold Loan
There are many benefits of a gold loan, making it one of the most advantageous funding options. Some of them are mentioned below:
- Minimum Documentation
Beneficiaries require only bare minimum paperwork to apply for a gold loan. You need to submit your identity and address proofs along with the collateral to the lending company for easy processing.
- Lower Processing Fee
Processing fee of a gold loan usually depends on the lenders. It differs from one another and depends on the loan amount. Higher loan amounts lead to a more excessive processing fee for a financial institution. For instance, Manappuram gold loan charges Rs. 10 as their processing fee.
- Low Interest Rate
Interest on the gold loan came down due to competition among the financial institutions. Many institutions provide loans with affordable interest rates which will help you in the long run. So opting for a gold loan can be beneficial when looking for any kind of financial help.
- No Salary Requirement
When choosing a gold loan, salary details are not required. You can avail loan even if you do not have a regular income. Collateral will cover the loan amount, so credit score is not mandatory.
- Fast Processing
With gold loans from popular financial institutions like Manappuram gold loan, approval is done within a few minutes. Quick processing time of a gold loan is a benefit as it will help you avail the loan amount as soon as possible.
- No Prepayment Penalty
Many financial institutions do not impose any penalty if you pre-close your loan by paying the amount before the due date. It is one of the best features of a gold loan as it lessens the burden of a borrower.
Investment in gold is beneficial as the price of gold is usually high and keeps on increasing. Gold acts as a medium through which you can avail a loan by using it as collateral.
Things to Keep in Mind before Opting for a Gold loan
There are various factors you should keep in mind while opting for a gold loan
- Purity of Gold
Purity of gold is one of the aspects that you should keep in mind while opting for a gold loan. The purest form of gold is 24 karats which will attract the highest value.
While opting for a Manappuram gold loan, the highest purity gold will help you get more loan amounts. However, the interest rate will not differ if there is a difference in purity.
- Valuation of Gold
Loan amount is decided on the valuation of gold. The gold should be between 18 to 24 karats for you to apply for a loan. However, any stones will be removed from gold jewellery, then it will be evaluated only on the gold and not the stones.
- Right Financial Institution
Having a proper financial institution that provides the best interest rate is a great option. While choosing a particular lender, you should keep in mind the flexibility in its repayment structure and additional benefits they provide.
In an unorganised market, if the gold loan per gram rate is higher than the current value, it will increase your interest rate. It might result in a debt trap, and upon non-payment of the loan amount, you might end up losing your gold.
- Loan to Value Rate
It is the maximum amount of money you can avail against mortgaging your gold. The LTV ratio is beneficial because financial institutions will give you gold loans depending upon it. The LTV ratio for gold loans is currently 75%, whereas in some cases, it will depend on your lender’s policy.
Therefore, financial institutions, while approving the loan amount, will calculate gold rate per gram on the present market value. Age of the gold is not mandatory while calculating the rate.
- Repayment Tenure
Repayment terms and conditions are one of the main factors you should keep in mind while availing gold loan. You should know when you have to pay back the loan amount and the various charges it includes in case there is any late payment.
Terms and conditions of the gold loan should also include if there are any prepayment penalties. You must be aware of the penalties you might need to pay if you repay the loan before the due time.
In case of an emergency, comparing offers from different financial institutions like Manappuram gold loan is the smart thing to do. It provides a hassle-free experience to the beneficiary, irrespective of their income group. Different financial institutions have various schemes, and you should choose the one that suits you.
