Gold Loan Balance Transfer - What are the benefits of getting a Gold Loan Balance Transfer?

Want to know which is the most popular way to get a loan, or which is the most popular loan option? A Gold loan! It is not a modern or recent thing either. People have been taking gold loans for centuries in India. Whenever money was needed, they would take loans in lieu of their gold ornaments.

Gold loans are mostly taken to meet emergency situations, such as a medical emergency, to save one’s business, to meet a sudden demand on the market, and such. Thus, these loans are not typically taken to meet anything other than sudden needs and emergency situations. There is a good reason for this. Gold ornaments are often hereditary items, and are passed down generations in the same family. Thus, gold items and gold family heirlooms have a lot of sentimental value.

However, such views are changing. People have started taking gold loans for going on a dream vacation, to open a business, to finance a wedding, and so on. Yes, the sentimental value for gold is still there, but people are using it not just for emergency reasons any more.

One of the biggest benefits of gold loans is its liquidity. Depending on your requirements, you can use this loan for anything. The other big benefit is the ease of getting this type of loan. Go for any other personal loan and you’ll see how long-drawn and hard the application process can be. Not so in case gold loans. You need to submit minimal documents, and your gold items need to be of sufficient quality and quantity to get the amount you want. However, do understand that gold prices fluctuate. Thus, it’ll be better to take gold loans when gold’s market price is high. This means you may have to wait a bit before taking loans to avoid loss.

Now, it may happen that you may find out your current gold loan lender’s service is not suiting you any longer. For such reasons, you want to transfer your gold loan to another lender or bank. This is what is called a Gold Loan Transfer. You basically transfer your gold loan from one lender to another.

Here is why people want gold loans balance transfers

• Not being able to bear the burden of high interest rates
• Getting lower loan amounts that are not equal to the value of their gold
• Inflexible repayment options that cannot be adjusted
• Not being provided enough security for their gold
  

What are the benefits of getting a Gold Loan Balance Transfer?

• Higher per gram rates: Some lenders offer more value in lieu of the gold you deposit. It pays to be with the one who gives more Loan to Value Ratio or LTV.
• Better interest rates: Lots of banks offer lower rates if you transfer your loan over to them. Take this advantage and you can save a lot of money on interest.
• Flexible repayment option: Some banks offer more and easier repayment options. Pick those that do.
• Better security: If a lender offers better security, you may want to make the switch.

Gold Loan Balance Transfer - Benefits of getting a Gold Loan Balance Transfer

Want to know which is the most popular way to get a loan, or which is the most popular loan option? A Gold loan! It is not a modern or recent thing either. People have been taking gold loans for centuries in India. Whenever money was needed, they would take loans in lieu of their gold ornaments.

Gold loans are mostly taken to meet emergency situations, such as a medical emergency, to save one’s business, to meet a sudden demand on the market, and such. Thus, these loans are not typically taken to meet anything other than sudden needs and emergency situations. There is a good reason for this. Gold ornaments are often hereditary items, and are passed down generations in the same family. Thus, gold items and gold family heirlooms have a lot of sentimental value.

However, such views are changing. People have started taking gold loans for going on a dream vacation, to open a business, to finance a wedding, and so on. Yes, the sentimental value for gold is still there, but people are using it not just for emergency reasons any more.

One of the biggest benefits of gold loans is its liquidity. Depending on your requirements, you can use this loan for anything. The other big benefit is the ease of getting this type of loan. Go for any other personal loan and you’ll see how long-drawn and hard the application process can be. Not so in case gold loans. You need to submit minimal documents, and your gold items need to be of sufficient quality and quantity to get the amount you want. However, do understand that gold prices fluctuate. Thus, it’ll be better to take gold loans when gold’s market price is high. This means you may have to wait a bit before taking loans to avoid loss.

Now, it may happen that you may find out your current gold loan lender’s service is not suiting you any longer. For such reasons, you want to transfer your gold loan to another lender or bank. This is what is called a Gold Loan Transfer. You basically transfer your gold loan from one lender to another.

Here is why people want gold loans balance transfers

• Not being able to bear the burden of high interest rates
• Getting lower loan amounts that are not equal to the value of their gold
• Inflexible repayment options that cannot be adjusted
• Not being provided enough security for their gold
  

What are the benefits of getting a Gold Loan Balance Transfer?

• Higher per gram rates: Some lenders offer more value in lieu of the gold you deposit. It pays to be with the one who gives more Loan to Value Ratio or LTV.
• Better interest rates: Lots of banks offer lower rates if you transfer your loan over to them. Take this advantage and you can save a lot of money on interest.
• Flexible repayment option: Some banks offer more and easier repayment options. Pick those that do.
• Better security: If a lender offers better security, you may want to make the switch.

Loan Against Gold - Advantages of Loan Against Gold

In circumstances where you need funds urgently for a particular need, taking out a loan could very well be the first thought on your mind. But even so, what loan should you take? Which kind of loan can be availed instantly and without much hassle, such that your need can be met with immediately? What loan would be low risk, and also offer low interest rates? Can you get flexible repayment options?

Well, if you favour all of these criteria when you look for a loan, then a loan against gold, also known as a Gold Loan, might be the perfect candidate for your financial necessity. Of course, the one prerequisite you need to keep in mind, without fail, is that you are in possession of some amount of gold jewellery. Gold loans, being secured loans, need you to pledge the gold articles that you have to the lender, who will sanction a corresponding loan amount to your account pretty quickly.

Benefits of Loan against Gold

If you are still wondering whether a loan against gold is indeed as useful as claimed here, you can breathe easy. We are here to lay out all the ways in which a loan against gold can be advantageous to a borrower. Read ahead to learn all the benefits that a gold loan can offer to you.

Easy Processing

To avail a gold loan, all you need to do is approach a willing lender with the gold articles, and of course your basic KYC documents. The only process that precedes disbursal of the loan being verification of the quantity and quality of the gold produced, you can expect a hassle-free experience.

As credit checks or income verification are not of much importance in the case of a loan against gold, the processing phase goes through easily with minimum documentation. This is because the loan is secured against collateral, which reduces a considerable amount of risk for the lender. Hence, they are free to go through with quick processing.

Quick Disbursal

In the loan market, most loan against gold products are labelled as 'Instant Gold Loans'. This is because the borrower does not have to wait for a few days, or even till the next day, to get the loan amount in his or her bank account. As the processing phase is done quickly, the lender can go ahead with disbursing the loan to the borrower immediately. In most cases, the gold loan is disbursed to the customer within just a couple of hours. This makes a loan against gold the ideal option if you are urgently in need of funds, and can't afford for the disbursal to take much longer.

Versatility

The terms of a gold loan does not specify any particular end use when it is issued to a customer. Going by this, a borrower can use funds from a loan against gold for any reason; be it a medical emergency or to finance a wedding. Such a lack of restrictions makes it of great use, especially if a number of different needs are to be met, or if you as a loan borrower have a change of heart as to the purpose of taking out the loan.

Low Interest Rates

As mentioned before, Gold loans are secured loans, as they are issued against a collateral asset. If the borrower is to fail to pay the loan back, the lender can simply sell the gold articles to recuperate the loan amount. This gives a significant advantage, as opposed to unsecured loans that have to increase interest rates to make sure the loan amount is recovered sooner. Thus, a loan against gold can be availed with considerably low rates of interest, which helps reduce the burden of repayment on the borrower.

Relaxed Credit History Check

Credit history and credit score are very important taken into consideration by banks while issuing an unsecured loan (needing a minimum score of 700). A credit check being the only way a lender can assess the creditworthiness of a borrower, this is quite understandable. In the case of a loan against gold, however, Credit score becomes of very little importance.

As the lender is not faced with any difficulty recovering the loan amount, they are least concerned with a customer’s credit history. For instance HDFC bank gold loans will be sanctioned even if a borrower approaches with a credit score as low as 500. However, banks might be reluctant to agree to a deal with a customer who has a really abysmal credit history. If you are planning to apply for a gold loan, do make it a point to check your credit score beforehand.

Low Processing Fees

As unsecured loans are provided without collateral security, banks are required to invest in scrutinising your income and credit history. Hence, they will charge you an additional processing fee, which can be upto 2% of the loan amount. As these formalities do not need to be strictly followed for the purpose of a loan against gold, the borrower has the advantage of not having to shell out a lot of money for processing fees.

No Prepayment Fee

Unlike other forms of loans, the borrowers are not required to pay an additional fee for foreclosure of a loan against gold. This offers great flexibility in terms of how the borrower decides to repay the loan - either in installments or in bulk. You can also decide to pay interest and principal amounts separately.
Flexibility in Repayment

As mentioned above, even bulk repayment is an open option for borrowers of gold loans. In addition, a loan against gold can be availed in any of 4 versatile gold loan schemes, which even offers the option to repay interest and principal amounts separately!

Overdraft Facility for Sustained Funds

If you run a business, then you could get an overdraft facility loan against any gold ornaments you have in your possession. This helps meet working capital needs as and when they arise. You end up paying a simple interest only for the sum used for the given number of days. This renewable loan option is offered by a number of banks like HDFC Bank. The overdraft facility against gold can even be looked at as a very good alternative to creating an emergency fund.

Does Gold Loan Influence Credit Score - How Does Loan Against Gold Influence Credit Score

Credit or loans are financial instruments which are given to you by lenders with a trust that you’ll pay the bank on time. A credit score reflects how you handle your loans and credit lines responsibly. So, the answer to your question would be yes, gold loans do influence your credit score.

On the other end of the spectrum, if you neglect payments, you’ll only hurt your credit score, which can take a lot of time to repair again. If you want to get access to loans at all times, it is important to handle credit carefully. To do that, you need to know about the different ways in which a gold loan can help increase your credit score.

To help you understand this subject better, here are a few points.

• Gold loan applications: Bet you didn't know that applying for gold loans impact your credit score? That’s right! Just by applying for a gold loan (and it’s not Loan for Gold, by the way), can reduce your score by a few points. But how? This happens because each time you apply for a gold loan; a hard inquiry is initiated by lenders. Hard inquiry is when lenders tell credit bureaus to assess your credit report. They determine whether your application will be approved, or not. Such hard inquiries reflect on your credit report, and therefore on your credit score. If you apply to too many gold loans in a short time, it’ll show that you are loan-hungry, or spend a lot. You won’t be getting any new loans that way. You can avoid this by applying for a gold loan through mymoneykarma! With a single, quick application, we find you the best Gold Loan deal from across national-level lenders.
  
  
• Gold loan payments: If lenders do accept your application, you will have to repay as per their terms and conditions. If you meet these, your credit score will be boosted. This is really helpful, as repayment is made very easy for gold loans, due to flexible repayment schemes and low interest rates.

How do gold loan payments affect your credit score?

It is important to make payments before or on time, if you want to make a good credit score over time. When you pay EMIs regularly on time, it tells you are responsible and credit worthy. It makes you more attractive to a borrower because they know you’ll always pay back on time. Lenders always give more preference to such customers. They can even lower the interest rates a bit for you!

Loan default

A default happens when you do not meet the gold loan repayment obligations according to the lender’s contract. Even if the delay is that of one day, the credit bureaus get to know about it from your lender. And that lowers your credit score substantially. In addition, you also attract charges for paying EMIs late. If you continue to pay EMIs late, you’ll get a legal notice from them, which can enable the bank to possess your gold article.

Gold Loan Overdraft vs Gold Loan EMIs

Even if you are suffering from a low credit score, a gold loan can still get you out of the financial emergencies. Like personal loans, lenders do not have a fixed purpose for which these can be used. In other words, you can use gold loans for anything you need. Want to go for a family vacation, or want to splurge for a destination wedding? How about a child’s higher education or just about any other financial requirement? Gold loans are quick personal loans, or in other words, short-term personal loans. These are secured loans too, which translates to the fact that its interest rates are much lower in comparison to unsecured personal loans.

Gold loans have many other benefits as well in the form of minimal documentation, lenient eligibility criteria, and fast loan disbursal. Yet another interesting feature is that these loans come in various schemes to suit your requirements. In this article, we are going to discuss one of these forms: overdraft gold loan and compare it to the regular gold loan with EMI facility. If you are thinking of taking such a loan soon, you need to understand the difference between the two of these, so that you can pick the one that suits you best.

The Difference between Overdraft Gold Loan and EMI Facility Gold Loan

Different customers have different requirements, and to meet them, gold loans are of two types as well. Some of these types are gold loan overdraft, and gold loan EMI. It all depends on your financial requirements which ones you choose. To help you understand the difference, here’s what it's all about.

Gold loan with EMI option

In this option, you visit the nearest bank branch, give your gold as a pledge of good faith, submit the necessary documents, and get the funds. On the basis of the lender’s regulations, you will get a fixed loan amount, for fixed loan tenure, and have to give regular payments as EMIs.

Both banks and NBFCs provide this facility. Banks give at least 80% of the loan value while NBFCs give 60% of the loan value. There is an upper cap on the amount as well, that the lender can sanction. Gold loan interest rates are usually between 10.45% and 24%.

Gold loan with overdraft facility

In this option, the overdraft facility is the gold loan amount. It is very similar to credit card spending. This means that you can spend as much as you need, anytime and anywhere, but there is still a credit limit. The interest rate shall be applicable only for the amount you use, not the whole amount you are given.

When you deposit your gold with banks and other lenders, you are given an overdraft account in which the loan is credited. Some banks do allow the withdrawal of the money with a debit card from any ATM of any bank. Some banks link this account with your savings account, or just open a new overdraft account. There are some lending institutions that open new accounts with features and benefits like a current account. You can also withdraw with cheques. In this case of overdraft facility gold loans, the interest rate is higher.

In conclusion

It is all about convenience in the end. Your necessities and means are what will define which Gold loan producy you choose. You can find out gold loan options most suited to you with us, and get in touch with the lender right away.

Gold Loan Vs. Loan Against Property

When we end up in a financially tight situation, often the first option that we consider is to avail a loan. Personal Loans may be the obvious first choice as well, as they can cater to any kind of short-term financial necessity. However, the high rates of interest charged on them could make you rethink it.

In other cases, the funds that you are in need of may not be covered by what a Personal Loan can offer. In such circumstances, it could be a useful remedy to opt for a secured loan- either a loan against property or a gold loan. If you are caught in a dilemma on which one you should go for, worry not! Here is a useful comparison of gold loans and loans against property,  which will help you comprehend the one that would suit you better, given that every person has means and needs.

Gold Loans

The Indian population does share a rather distinctive affinity towards gold. Each family, no matter what their financial status is, makes it a point to invest in keeping some amount of gold jewellery as a treasured possession. This is a great back-up asset indeed, as gold loans can offer instant liquidity to these gold articles, without having to sell them altogether, if one is just willing to pledge it as collateral in times of a crisis.

Advantages and Disadvantages of Gold Loans

Gold loans, which were once a very common loan medium, have not been as popular over recent years. However, in the current crisis situation, they are certainly regaining popularity by leaps and bounds, Here are some of its characteristics that you need to consider before opting for a loan against gold.

Easy availability: It is easy to get a Gold loan, which makes it an ideal option during an urgent need for funds. Presently, most banks and NFBCs offer loans against gold. The time taken to process a gold loan is pretty short, which means you could get the gold loan amount disbursed within a few hours. This translates into an instant loan facility.

Flexible repayment options: As opposed to other loan types, lenders offer many flexible schemes on gold loans. For instance, you could pay only the interest component during the loan tenure and pay principal at the end of it. The absence of a prepayment fee makes it all the more accessible for people of different financial means. Find out more on the different ways you can repay gold loans over here.

Less consequences: Even if it comes to the worst, in that you are incapable of repaying the loan, the lender can recover its dues by taking possession of the pledged gold. The lender as well as the borrower is faced with a straightforward solution to the recovery problem, as opposed to the case of a loan against property, where the property has to be sold for a price worth the loan. The situation is even more inconvenient in the case of unsecured loans like Personal Loans.

Interest rates: Gold Loans have relatively low interest rates, as compared to personal loans. However, the rates tend to be higher than that of a Loan against Property, as Gold Loans are secured with comparatively less substantial collateral.

Low LTV and short tenure: The Reserve Bank of India does not allow NBFCs to offer loans with Loan-To-Value ratio above 75%. So, if you mortgage gold ornaments worth Rs. 10 thousand, at best you can get only a loan of up to Rs. 7,500. Along with the processing fee and miscellaneous charges, the final amount that you get in hand would be fairly reduced. Gold loans also offer a maximum tenure of 1 year. Hence, make sure you take a gold loan only if you can repay the amount within the short tenure.
Loan against Property

If you have any property registered in your name, you could opt for a loan against your property to finance any of your needs. The value of the loan is calculated according to the market value of the property, as well as your repayment capability.

Advantages And Disadvantages of Loan Against Property

Lower interest rates: Since LAPs are secured loans with substantial collateral as security, lenders are willing to offer much lower interest rates. As compared to that of Personal Loans or Gold Loan this can be quite less.

Tiresome loan procedure: While going for an LAP, the lenders often take quite a lot of time to evaluate the market value of your asset, review the legal documents, and to conduct other background checks such as assessing your repayment capability. As this takes time, you cannot expect to get a loan instantly even in the face of an emergency situation.

Chances of higher financial stress: On Home Loans, you get some tax advantages while paying EMIs. However, the same is not applicable for an LAP. Once you get a Loan against Property, there are several stringent terms and conditions that you have to abide by. Missing payment of EMIs or making late payments could result in a penalty, as per which you could suffer heavy losses.

Non-repayment woes: In a worst case scenario, if you find yourself in a position where you cannot repay the loan, the lender has the right to take over possession of your property, and then auction it in order to recover its dues. This is certainly a heavier blow to the borrower, than in the case of losing a few gold ornaments.

Gold Loan Business Model in India - Economics of Gold Loan in India

Gold loans, till mostly an unorganized industry sector, may be uniquely positioned to capitalize on demands for loans in the post-Covid period. This is especially true for both individuals as well as for small business clients. A strong digital footprint and an expanded branch network may be just what’s needed to capture this sizable market segment.

Right now, the pandemic is creating a problem in the availability of loan funds. This is happening because the banks themselves are in a bad shape. Thus, they are keen to give money under a stringent and strict policy, to only those customers who are most likely to pay back loans. Banks may have considerable liquidity, but they are not willing to lend out, except to credit card owners. Because of all this, it is harder to get personal loans right now. Lenders are now looking beyond credit scores. For individuals and small businesses strapped for cash, this has created a unique problem. However, in such a situation, the savior can be a gold loan.

The Economics of Gold Loan in India

According to a KPMG report in January, the Indian organized gold loan market is estimated to be valued at around Rs. 467,200 crore. Approximately, this is 35% of the gold loan market with commercial banks. Small finance banks, Fintech companies and NBFCs are now the key players in the market. The unorganized gold loan sector is thrice as large.

Right now, there are a couple of big opportunities for the gold loan players in the organized market. Firstly, they have a big opportunity to bring unorganized money lenders under the organized market. This will ensure a tighter RBI regulation and a low rate of interest. Secondly, from out of the 22,000 tons of gold which Indian households have right now, only 5% are pledged as deposits of gold loans.

Now is the time to make the best effort

From all the rest, Muthoot Finance has been the preferred gold loan company for a long time. Compared to many NBFCs, its gold-lending business is de-risked.
How can gold loans rise to the challenge post COVID?

Muthoot Finance company’s chairman, George Alexander Muthoot, admits that after the pandemic, the market scenario can give a big opportunity for gold loan companies in the country. Here is how it can happen.

1. Small businesses will be in need of working capital. Since banks are reluctant to provide new risk for themselves, the role is taken by gold loan companies.
2. Because of the lockdown, payments are delayed to traders, small businesses and shopkeepers. They require finance in the meantime till regular cash starts flowing again. Gold loan can be the better credit choice here.
3. Both Mannappuran and Muthoot Finance are expecting a huge surge in demand for gold loans from retail customers as well. Many families are facing job loss and income reduction. For them, gold loan is the credit choice that is least risky.
4. Gold loans also have the Loan to Value advantage. Companies offering this service are giving 75% LTV.
   

For both small businesses and individuals, gold loans may be positioned uniquely to capitalize on the post-COVID demand for credit. A strong digital footprint and an expanded branch network may be able to capture this nascent market.

Indian Gold Loan Market Set to Skyrocket - Indian Gold Loan Market Set to Skyrocket to 2022

According to a KPMG report, India’s gold loan market is being expected to grow to Rs. 4617 billion by 2022. This is at a 5-year compounded annual growth rate of 13.4%.

In the 2018-2019 fiscal year, companies dealing in gold loans have aggressively expanded their branch networks around the country, especially over northern and eastern states of the country.

The KPMG report said, “Moving forward, these companies are expected to focus on optimizing their asset utilization and leveraging their existing branch infrastructure to maximize the brand-level AUM and customer outreach.”

The name of the KPMG report is “Return of gold financiers in India’s organized lending market.”

What Brings this Growth?

New-age fintech players NBFCs have opened up an untapped market among digitally enabled customers, the number of whom is daily increasing. All this has been possible due to the emergence of digital and online models of gold loan service. All this means that it is now easier than ever before to get a gold loan. For instance, a customer only has to provide minimal documentation online, and has to visit the bank just once to deposit the gold ornaments. Once this is done, the funds are credited to the customer’s account. Companies are even offering doorstep service to customers, something that was till not heard only in conjunction with more rudimentary loan types.

It is expected that industry players like banks, NBFCs and FinTech firms will be investing more to develop “digital on-boarding capacities.” Right now, such capabilities are essential for capturing this segment, as well as the attention of tech-savvy customers.

Right now, the organized gold loan market comprises many banks, Nidhi companies, Fintech companies and Non-Banking Financial Companies. All of them contribute near to 35% of the total Indian gold loan market.

According to the KPMG report, these companies are competing not just against each other, but against financial service providers as well. This means there is considerable competition in the market due to the presence of many industry players. The organized gold market is still a new industry sector. All of this spells good news to gold loan customers.

The size of the unorganized gold loan market is three times that of the organized one, but it also shows high growth potential. Currently, it is actively penetrated by big financial service players offering unsecured loans.

In the past few years, major gold loan players have achieved geographical saturation. They are not exploring niches like SME loans and microfinance to keep their companies growing.

According to the report, customers who previously pledged their gold to meet emergency situations, holidays and durable purchases now get a risk-free way to get funds without the need to give any collateral.

The report says “Lenders are partnering with Fintech companies to leverage the advancement in technology for developing enhanced underwriting capabilities that are agnostic to the availability of customer credit history.”

Lately, the use of credit card loans, personal loans and other consumer durable loans are gaining in popularity due to the arrival of robust underwriting systems and technological platforms.

Are there any Challenges?

The current gold market is not without its challenges. These challenges include gold price volatility, and the stress in the NBFCs. In 2019, the price of precious metals reached an all-time high. After this, gold loan companies shall be “more conservative” in their efforts to provide loans. They shall continue to give low LTV (Loan to Value) ratio, and Low Tenure Loans to offset their risks due to gold price volatility.

While gold price globally is expected to fall in the long term, the Indian gold market is expected to grow with high growth potential. This is due to the fact that banks are getting more selective in credit disbursement. The spread to new areas of the country will also aid growth.

How to Get Gold Loan Now - How Safe Are Gold Loans in 2021?

You may be able to ignore the gold ornaments at home, but you can’t ignore the hue and cry over gold loans these days. This is partly due to soaring prices, and partly due to increased consumerism, along with evolving social norms. Gold loans are seeing not just unprecedented rise right now, but are stated to increase in popularity in the future as well.

Is the Gold Loan Market Growing?

Think about this: The organized gold loan market in India was worth 25,000 crore in FY 2009. It grew at a compound rate of 38% between FY 2002 and 2009. Today, it is expected to grow at a compound rate of 40%. It is stated to reach a market value of 50,000 crore. According to a study by the ICRA Management Consulting Services, a study shows the alarming situation of pawn brokers. Big players like NBFCs, new Fintech companies and others are coming into the market, making the work of small players very difficult. However, there are other reasons as well.

Firstly, it is all about convenience. Sometimes, when customers pledge their gold for loans, it is because of desperation due to some situation. However, it is still are step more convenient than other personal loans. One can get gold loans today faster.

Secondly, gold loans are known for being offered with a low interest rate. While it is currently increasing certainly due to increasing demand, it is still less than unsecured personal loans. Gold loan interest rates are from 10% to 24% per year while other personal loans have interest rates of 16% to 26%. Remember that interest rate depends on your credit profile.

After all this, we’d like to say that it is far better to take a gold loan than a personal loan because of lower interest rates. Gold loans are secured loans. An additional reason to take this is that most NBFCs and banks will allow you to pay interest on a monthly basis, while the principal can be paid at the end of the loan period. From the perspective of interest, this arrangement works much better.

At the same time, you can determine the amount of loan based on the market value of your gold items. This means you do not need to show any income proof, unlike personal loans in which the loan is determined after the scrutiny of your income. You’ll need a lot of income proof to get a personal loan. Not so in case of gold loans, since income is not so important here. What is important is that you submit your gold with the bank. That is all that’s needed. And then, you pay back the loan to redeem your gold. Banks like HDFC and ICICI may ask for your personal details such as ID, and this verification process takes an hour. Others like Manappuram and Muthoot sanction your gold loan in a few minutes.
Is it Better to Get a Gold Loan Now?

Instead of hoarding your gold at home in a locker, why not put it to good use? You don’t have to wait for an emergency to use them either. Have a business to finance, or an education to fund? Want to go for a dream vacation? Your gold can be used for anything. After all, these are personal loans. Financial institutions give you up to 70% to 80% of the value of your gold.

Unlike the past, pledging your gold is not longer seen as taboo. That is why right now, gold is seen as a convenient and legitimate way of meeting any emergency, or to get quick funds for anything. Right now, gold loans are taken by people from all walks of life seeking to meet urgent situations, or for bettering their lot. Others choose this because gold loans are easier to get than other types of personal loans. Right now, gold prices are soaring, and banks themselves are pushing customers towards gold loans.

That being said, you should not take a gold loan wantonly without thinking. After all, a loss of gold is still a serious and irredeemable loss. It’ll look bad if you lose your family heirloom, right? If you fail to pay the loan back on time, banks can charge a higher interest, and auction off your gold. Thus, before taking such a credit, you should still weigh the pros and cons. There are risks, and you should be aware of them.

Gold Loan Vs. Loan Against Property

When we end up in a financially tight situation, often the first option that we consider is to avail a loan. Personal Loans may be the obvious first choice as well, as they can cater to any kind of short-term financial necessity. However, the high rates of interest charged on them could make you rethink it.

In other cases, the funds that you are in need of may not be covered by what a Personal Loan can offer. In such circumstances, it could be a useful remedy to opt for a secured loan- either a loan against property or a gold loan. If you are caught in a dilemma on which one you should go for, worry not! Here is a useful comparison of gold loans and loans against property, which will help you comprehend the one that would suit you better, given that every person has means and needs.

Gold Loans

The Indian population does share a rather distinctive affinity towards gold. Each family, no matter what their financial status is, makes it a point to invest in keeping some amount of gold jewellery as a treasured possession. This is a great back-up asset indeed, as gold loans can offer instant liquidity to these gold articles, without having to sell them altogether, if one is just willing to pledge it as collateral in times of a crisis.

Advantages and Disadvantages of Gold Loans

Gold loans, which were once a very common loan medium, have not been as popular over recent years. However, in the current crisis situation, they are certainly regaining popularity by leaps and bounds, Here are some of its characteristics that you need to consider before opting for a loan against gold.

Easy availability: It is easy to get a Gold loan, which makes it an ideal option during an urgent need for funds. Presently, most banks and NFBCs offer loans against gold. The time taken to process a gold loan is pretty short, which means you could get the gold loan amount disbursed within a few hours. This translates into an instant loan facility.

Flexible repayment options: As opposed to other loan types, lenders offer many flexible schemes on gold loans. For instance, you could pay only the interest component during the loan tenure and pay principal at the end of it. The absence of a prepayment fee makes it all the more accessible for people of different financial means. Find out more on the different ways you can repay gold loans over here.

Less consequences: Even if it comes to the worst, in that you are incapable of repaying the loan, the lender can recover its dues by taking possession of the pledged gold. The lender as well as the borrower is faced with a straightforward solution to the recovery problem, as opposed to the case of a loan against property, where the property has to be sold for a price worth the loan. The situation is even more inconvenient in the case of unsecured loans like Personal Loans.

Interest rates: Gold Loans have relatively low interest rates, as compared to personal loans. However, the rates tend to be higher than that of a Loan against Property, as Gold Loans are secured with comparatively less substantial collateral.

Low LTV and short tenure: The Reserve Bank of India does not allow NBFCs to offer loans with Loan-To-Value ratio above 75%. So, if you mortgage gold ornaments worth Rs. 10 thousand, at best you can get only a loan of up to Rs. 7,500. Along with the processing fee and miscellaneous charges, the final amount that you get in hand would be fairly reduced. Gold loans also offer a maximum tenure of 1 year. Hence, make sure you take a gold loan only if you can repay the amount within the short tenure.

Loan against Property

If you have any property registered in your name, you could opt for a loan against your property to finance any of your needs. The value of the loan is calculated according to the market value of the property, as well as your repayment capability.

Advantages And Disadvantages of Loan Against Property

Lower interest rates: Since LAPs are secured loans with substantial collateral as security, lenders are willing to offer much lower interest rates. As compared to that of Personal Loans or Gold Loan this can be quite less.

Tiresome loan procedure: While going for an LAP, the lenders often take quite a lot of time to evaluate the market value of your asset, review the legal documents, and to conduct other background checks such as assessing your repayment capability. As this takes time, you cannot expect to get a loan instantly even in the face of an emergency situation.

Chances of higher financial stress: On Home Loans, you get some tax advantages while paying EMIs. However, the same is not applicable for an LAP. Once you get a Loan against Property, there are several stringent terms and conditions that you have to abide by. Missing payment of EMIs or making late payments could result in a penalty, as per which you could suffer heavy losses.

Non-repayment woes: In a worst case scenario, if you find yourself in a position where you cannot repay the loan, the lender has the right to take over possession of your property, and then auction it in order to recover its dues. This is certainly a heavier blow to the borrower, than in the case of losing a few gold ornaments.

How Safe Are Gold Loans in 2021? - How to Get Gold Loan Now

You may be able to ignore the gold ornaments at home, but you can’t ignore the hue and cry over gold loans these days. This is partly due to soaring prices, and partly due to increased consumerism, along with evolving social norms. Gold loans are seeing not just unprecedented rise right now, but are stated to increase in popularity in the future as well.

Is the Gold Loan Market Growing?

Think about this: The organized gold loan market in India was worth 25,000 crore in FY 2009. It grew at a compound rate of 38% between FY 2002 and 2009. Today, it is expected to grow at a compound rate of 40%. It is stated to reach a market value of 50,000 crore. According to a study by the ICRA Management Consulting Services, a study shows the alarming situation of pawn brokers. Big players like NBFCs, new Fintech companies and others are coming into the market, making the work of small players very difficult. However, there are other reasons as well.

Firstly, it is all about convenience. Sometimes, when customers pledge their gold for loans, it is because of desperation due to some situation. However, it is still are step more convenient than other personal loans. One can get gold loans today faster.

Secondly, gold loans are known for being offered with a low interest rate. While it is currently increasing certainly due to increasing demand, it is still less than unsecured personal loans. Gold loan interest rates are from 10% to 24% per year while other personal loans have interest rates of 16% to 26%. Remember that interest rate depends on your credit profile.

After all this, we’d like to say that it is far better to take a gold loan than a personal loan because of lower interest rates. Gold loans are secured loans. An additional reason to take this is that most NBFCs and banks will allow you to pay interest on a monthly basis, while the principal can be paid at the end of the loan period. From the perspective of interest, this arrangement works much better.

At the same time, you can determine the amount of loan based on the market value of your gold items. This means you do not need to show any income proof, unlike personal loans in which the loan is determined after the scrutiny of your income. You’ll need a lot of income proof to get a personal loan. Not so in case of gold loans, since income is not so important here. What is important is that you submit your gold with the bank. That is all that’s needed. And then, you pay back the loan to redeem your gold. Banks like HDFC and ICICI may ask for your personal details such as ID, and this verification process takes an hour. Others like Manappuram and Muthoot sanction your gold loan in a few minutes.

Is it Better to Get a Gold Loan Now?

Instead of hoarding your gold at home in a locker, why not put it to good use? You don’t have to wait for an emergency to use them either. Have a business to finance, or an education to fund? Want to go for a dream vacation? Your gold can be used for anything. After all, these are personal loans. Financial institutions give you up to 70% to 80% of the value of your gold.

Unlike the past, pledging your gold is not longer seen as taboo. That is why right now, gold is seen as a convenient and legitimate way of meeting any emergency, or to get quick funds for anything. Right now, gold loans are taken by people from all walks of life seeking to meet urgent situations, or for bettering their lot. Others choose this because gold loans are easier to get than other types of personal loans. Right now, gold prices are soaring, and banks themselves are pushing customers towards gold loans.

That being said, you should not take a gold loan wantonly without thinking. After all, a loss of gold is still a serious and irredeemable loss. It’ll look bad if you lose your family heirloom, right? If you fail to pay the loan back on time, banks can charge a higher interest, and auction off your gold. Thus, before taking such a credit, you should still weigh the pros and cons. There are risks, and you should be aware of them.

How Safe Are Gold Loans in 2021? - How to get a Gold Loan Now

You may be able to ignore the gold ornaments at home, but you can’t ignore the hue and cry over gold loans these days. This is partly due to soaring prices, and partly due to increased consumerism, along with evolving social norms. Gold loans are seeing not just unprecedented rise right now, but are stated to increase in popularity in the future as well.

Is the Gold Loan Market Growing?

Think about this: The organized gold loan market in India was worth 25,000 crore in FY 2009. It grew at a compound rate of 38% between FY 2002 and 2009. Today, it is expected to grow at a compound rate of 40%. It is stated to reach a market value of 50,000 crore. According to a study by the ICRA Management Consulting Services, a study shows the alarming situation of pawn brokers. Big players like NBFCs, new Fintech companies and others are coming into the market, making the work of small players very difficult. However, there are other reasons as well.

Firstly, it is all about convenience. Sometimes, when customers pledge their gold for loans, it is because of desperation due to some situation. However, it is still are step more convenient than other personal loans. One can get gold loans today faster.

Secondly, gold loans are known for being offered with a low interest rate. While it is currently increasing certainly due to increasing demand, it is still less than unsecured personal loans. Gold loan interest rates are from 10% to 24% per year while other personal loans have interest rates of 16% to 26%. Remember that interest rate depends on your credit profile.

After all this, we’d like to say that it is far better to take a gold loan than a personal loan because of lower interest rates. Gold loans are secured loans. An additional reason to take this is that most NBFCs and banks will allow you to pay interest on a monthly basis, while the principal can be paid at the end of the loan period. From the perspective of interest, this arrangement works much better.

At the same time, you can determine the amount of loan based on the market value of your gold items. This means you do not need to show any income proof, unlike personal loans in which the loan is determined after the scrutiny of your income. You’ll need a lot of income proof to get a personal loan. Not so in case of gold loans, since income is not so important here. What is important is that you submit your gold with the bank. That is all that’s needed. And then, you pay back the loan to redeem your gold. Banks like HDFC and ICICI may ask for your personal details such as ID, and this verification process takes an hour. Others like Manappuram and Muthoot sanction your gold loan in a few minutes.

Is it Better to Get a Gold Loan Now?

Instead of hoarding your gold at home in a locker, why not put it to good use? You don’t have to wait for an emergency to use them either. Have a business to finance, or an education to fund? Want to go for a dream vacation? Your gold can be used for anything. After all, these are personal loans. Financial institutions give you up to 70% to 80% of the value of your gold.

Unlike the past, pledging your gold is not longer seen as taboo. That is why right now, gold is seen as a convenient and legitimate way of meeting any emergency, or to get quick funds for anything. Right now, gold loans are taken by people from all walks of life seeking to meet urgent situations, or for bettering their lot. Others choose this because gold loans are easier to get than other types of personal loans. Right now, gold prices are soaring, and banks themselves are pushing customers towards gold loans.

That being said, you should not take a gold loan wantonly without thinking. After all, a loss of gold is still a serious and irredeemable loss. It’ll look bad if you lose your family heirloom, right? If you fail to pay the loan back on time, banks can charge a higher interest, and auction off your gold. Thus, before taking such a credit, you should still weigh the pros and cons. There are risks, and you should be aware of them.

Does Gold Loan Influence Credit Score - How do gold loan payments affect your credit score?

Credit or loans are financial instruments which are given to you by lenders with a trust that you’ll pay the bank on time. A credit score reflects how you handle your loans and credit lines responsibly. So, the answer to your question would be yes, gold loans do influence your credit score.

On the other end of the spectrum, if you neglect payments, you’ll only hurt your credit score, which can take a lot of time to repair again. If you want to get access to loans at all times, it is important to handle credit carefully. To do that, you need to know about the different ways in which a gold loan can help increase your credit score.

To help you understand this subject better, here are a few points.

Gold loan applications: Bet you didn't know that applying for gold loans impact your credit score? That’s right! Just by applying for a gold loan (and it’s not Loan for Gold, by the way), can reduce your score by a few points. But how? This happens because each time you apply for a gold loan; a hard inquiry is initiated by lenders. Hard inquiry is when lenders tell credit bureaus to assess your credit report. They determine whether your application will be approved, or not. Such hard inquiries reflect on your credit report, and therefore on your credit score. If you apply to too many gold loans in a short time, it’ll show that you are loan-hungry, or spend a lot. You won’t be getting any new loans that way. You can avoid this by applying for a gold loan through mymoneykarma! With a single, quick application, we find you the best Gold Loan deal from across national-level lenders.

Gold loan payments: If lenders do accept your application, you will have to repay as per their terms and conditions. If you meet these, your credit score will be boosted. This is really helpful, as repayment is made very easy for gold loans, due to flexible repayment schemes and low interest rates.

How do gold loan payments affect your credit score?

It is important to make payments before or on time, if you want to make a good credit score over time. When you pay EMIs regularly on time, it tells you are responsible and credit worthy. It makes you more attractive to a borrower because they know you’ll always pay back on time. Lenders always give more preference to such customers. They can even lower the interest rates a bit for you!
Loan default

A default happens when you do not meet the gold loan repayment obligations according to the lender’s contract. Even if the delay is that of one day, the credit bureaus get to know about it from your lender. And that lowers your credit score substantially. In addition, you also attract charges for paying EMIs late. If you continue to pay EMIs late, you’ll get a legal notice from them, which can enable the bank to possess your gold article.
In conclusion

You know by now how a gold loan can influence your credit score. Multiple applications lower the score, and making regular EMI payments boost it. Don’t miss the payment date. Set a reminder if you have to. Your credit score depends on it.

Gold Loan Overdraft vs Gold Loan EMIs

Even if you are suffering from a low credit score, a gold loan can still get you out of the financial emergencies. Like personal loans, lenders do not have a fixed purpose for which these can be used. In other words, you can use gold loans for anything you need. Want to go for a family vacation, or want to splurge for a destination wedding? How about a child’s higher education or just about any other financial requirement? Gold loans are quick personal loans, or in other words, short-term personal loans. These are secured loans too, which translates to the fact that its interest rates are much lower in comparison to unsecured personal loans.

Gold loans have many other benefits as well in the form of minimal documentation, lenient eligibility criteria, and fast loan disbursal. Yet another interesting feature is that these loans come in various schemes to suit your requirements. In this article, we are going to discuss one of these forms: overdraft gold loan and compare it to the regular gold loan with EMI facility. If you are thinking of taking such a loan soon, you need to understand the difference between the two of these, so that you can pick the one that suits you best.

The Difference between Overdraft Gold Loan and EMI Facility Gold Loan

Different customers have different requirements, and to meet them, gold loans are of two types as well. Some of these types are gold loan overdraft, and gold loan EMI. It all depends on your financial requirements which ones you choose. To help you understand the difference, here’s what it's all about.

Gold loan with EMI option

In this option, you visit the nearest bank branch, give your gold as a pledge of good faith, submit the necessary documents, and get the funds. On the basis of the lender’s regulations, you will get a fixed loan amount, for fixed loan tenure, and have to give regular payments as EMIs.

Both banks and NBFCs provide this facility. Banks give at least 80% of the loan value while NBFCs give 60% of the loan value. There is an upper cap on the amount as well, that the lender can sanction. Gold loan interest rates are usually between 10.45% and 24%.

Gold loan with overdraft facility

In this option, the overdraft facility is the gold loan amount. It is very similar to credit card spending. This means that you can spend as much as you need, anytime and anywhere, but there is still a credit limit. The interest rate shall be applicable only for the amount you use, not the whole amount you are given.

When you deposit your gold with banks and other lenders, you are given an overdraft account in which the loan is credited. Some banks do allow the withdrawal of the money with a debit card from any ATM of any bank. Some banks link this account with your savings account, or just open a new overdraft account. There are some lending institutions that open new accounts with features and benefits like a current account. You can also withdraw with cheques. In this case of overdraft facility gold loans, the interest rate is higher.

In conclusion

It is all about convenience in the end. Your necessities and means are what will define which Gold loan producy you choose. You can find out gold loan options most suited to you with us, and get in touch with the lender right away.

Liabilities - What Are Liabilities?

Liability is really a fancy word or debt, or for something you owe. When you know the total liabilities you have, you can subtract your assets from this amount to find out your net worth. Finding out, and keeping track of your net worth is not just a one-time thing. You need to keep a tab on it throughout your life to have a healthy personal financial situation.

Know that liabilities are a part of your personal finance. Besides, these are not harmful as long as you keep them in check. Here is what you should know about liabilities.

What are the different types of liabilities?

As said above, liabilities are money you owe. This can be to a bank or to an individual lender. Liabilities take the form of loans. These can be short-term or long-term. Here are the examples of liabilities.

• Student loans
• Car loans or auto loans
• Mortgage
• Credit card balance
• Payday loans
• Unsecured loans
• Secured loans

As you can see, these can be of many types. Another popular type of loan which is doing the rounds right now is gold loan. This is very popular right now, and in high demand. Taking a gold loan is being encouraged right now, during the pandemic period.

Why do liabilities matter?

Liabilities matter because they tell how good or bad you are in money management. These tell about your financial missteps, and even stop you from growing or building assets. Having these in your life does not necessarily mean that you’re in an emergency situation financially. To understand these, you’ll need to look at the context.

The type of debt you have is important. There are some liabilities which can actually increase your net worth over a period of time. For instance, student loans may lead to a good education and a high paying job. On the other hand, buying things frequently with your credit card won’t have any effect on your net worth.

Liabilities only become a problem when they become more than your assets. What happens then is that you keep on losing money till your assets exceed liabilities once more. When liability is more, you get a negative net worth. It stops you from pursuing financial goals freely, and restricts you from saving for retirement, and building emergency funds.

What you need to pay attention to is both sides of the balance sheet, as well as to subtle changes. Don’t let your debts exceed assets. Ensure there is a plan in place as soon as possible. Also, start building assets.

Keep liabilities under control

If you are not happy with your liabilities, there are some things you can do. These include debt consolidation and tackling debts with highest interest rates first.

How Safe Are Gold Loans in 2020?

 Is the Gold Loan Market Growing?

Think about this: The organized gold loan market in India was worth 25,000 crore in FY 2009. It grew at a compound rate of 38% between FY 2002 and 2009. Today, it is expected to grow at a compound rate of 40%. It is stated to reach a market value of 50,000 crore. According to a study by the ICRA Management Consulting Services, a study shows the alarming situation of pawn brokers. Big players like NBFCs, new Fintech companies and others are coming into the market, making the work of small players very difficult. However, there are other reasons as well.

Firstly, it is all about convenience. Sometimes, when customers pledge their gold for loans, it is because of desperation due to some situation. However, it is still are step more convenient than other personal loans. One can get gold loans today faster.

Secondly, gold loans are known for being offered with a low interest rate. While it is currently increasing certainly due to increasing demand, it is still less than unsecured personal loans. Gold loan interest rates are from 10% to 24% per year while other personal loans have interest rates of 16% to 26%. Remember that interest rate depends on your credit profile.

After all this, we’d like to say that it is far better to take a gold loan than a personal loan because of lower interest rates. Gold loans are secured loans. An additional reason to take this is that most NBFCs and banks will allow you to pay interest on a monthly basis, while the principal can be paid at the end of the loan period. From the perspective of interest, this arrangement works much better.

At the same time, you can determine the amount of loan based on the market value of your gold items. This means you do not need to show any income proof, unlike personal loans in which the loan is determined after the scrutiny of your income. You’ll need a lot of income proof to get a personal loan. Not so in case of gold loans, since income is not so important here. What is important is that you submit your gold with the bank. That is all that’s needed. And then, you pay back the loan to redeem your gold. Banks like HDFC and ICICI may ask for your personal details such as ID, and this verification process takes an hour. Others like Manappuram and Muthoot sanction your gold loan in a few minutes.
Is it Better to Get a Gold Loan Now?

Instead of hoarding your gold at home in a locker, why not put it to good use? You don’t have to wait for an emergency to use them either. Have a business to finance, or an education to fund? Want to go for a dream vacation? Your gold can be used for anything. After all, these are personal loans. Financial institutions give you up to 70% to 80% of the value of your gold.

Unlike the past, pledging your gold is not longer seen as taboo. That is why right now, gold is seen as a convenient and legitimate way of meeting any emergency, or to get quick funds for anything. Right now, gold loans are taken by people from all walks of life seeking to meet urgent situations, or for bettering their lot. Others choose this because gold loans are easier to get than other types of personal loans. Right now, gold prices are soaring, and banks themselves are pushing customers towards gold loans.

That being said, you should not take a gold loan wantonly without thinking. After all, a loss of gold is still a serious and irredeemable loss. It’ll look bad if you lose your family heirloom, right? If you fail to pay the loan back on time, banks can charge a higher interest, and auction off your gold. Thus, before taking such a credit, you should still weigh the pros and cons. There are risks, and you should be aware of them.