A gold loan is one of the quickest ways to get over a financial difficulty. NBFCs and banks provide loans against gold usually the same-day the gold evaluation is done and loan application approved. The eligibility criteria for jewel loan are relaxed; also, the documentation process is simple. Out of the major gold loan schemes, Muthoot Finance gold loan scheme is the largest in India, as it has flexible loan amount, conditions, borrower-centric terms, and tenure.
One can pledge his/her gold jewellery or bank-purchased coins and receive funds between Rs 1,500 and Rs. 1 crore. Most of the financial institutions provide loan of not less than Rs. 20,000 or Rs. 10,000. However Muthoot offers loans of low amount as well, especially for the rural sector in the country. The widespread network of this NBFC makes it possible to reach customers in time, making it accessible and accountable, every time someone applies for a gold loan.
So why are Muthoot Finance and its jewel loan popular? It is because of the quick turnaround time and high rate of loan approval. The loan can be taken to fulfil personal and business expenses. Many borrow the funds for education, wedding, home renovation, travel, medical treatment, purchasing gadgets, debt consolidation etc. For any person, such flexibility in terms of fund usage is convenient, and this is why people trust Muthoot for jewel loans.
Below-given are reasons as to how Muthoot gold loan is the largest borrower-friendly scheme in India.
- Suitable Tenure
Banks offer tenure of 1 year for gold loans. Some provide 2 years tenure, but Muthoot allows one to borrow for period between 7 days and 36 months. The rate of interest and tenure affects the total cost of the loan. A loan with long tenure will make one pay more interest component. The interest rate if low will not make much difference if the tenure is long and vice-versa.
The NBFC thus gives a person the opportunity to reduce the interest burden and choose an inexpensive financing tool for their monetary requirement on a tenure, which they are comfortable with.
- High Loan to Value Ratio
The Reserve Bank of India has allowed gold loan amount to be pegged at 75 percent of the gold jewellery’s value and banks/NBFCs follow this ratio. However, depending on the profile of customer, gold weight, and purity, a lower loan to value ratio can be offered by the financial institutions. Muthoot Finance gives a person maximum loan amount as per the gold asset he/she possess. It also guarantees safety to the gold pledged. The asset is stored in a safe vault, which is guarded 24×7. When the borrower repays the loan, the gold is given back to the customer.
- Minimal Documentation
Even if a person is salaried or a businessman, the documents required is minimum. There is no such paperwork involved, as the applicant has to submit only recent passport-sized photographs, identity proof, and residence proof. These are the documents that anyone would need even to take a phone connection. Usually a PAN card and Aadhar card suffice as documents. But, the NBFC may ask for additional documents if the loan amount is high.
- Less Stringent Eligibility Criteria
An applicant who is above 18 years of age is eligible to apply for Muthoot Finance loan against gold. The employment and income proof does not matter. Also, the individual’s credit score and employment status does not affect the chances of loan approval. If the applicant can submit all the required documents and has suitable type of gold asset, then he/she can get the funds.
Women and farmers also can benefit from the loan scheme. They are eligible to get funds at discounted interest rate. However, any usage for business or agricultural purpose would require the person to submit proof of activity.
- Affordable Fees and Charges
There are certain fees and charges that one has to bear when taking a loan. Muthoot Finances asks for minimum charges and fees, unlike other financial institutions. While unsecured and other secured loans can entail a processing fee of up to 2.5%, a loan against gold applies only 0.25% to 1% fee on the total loan amount. Such low fee is affordable for borrowers.
Moreover, there are no prepayment charges, and one can settle or close the loan at anytime. However, penalty charges will apply in case a borrower defaults at paying in time. Delayed payments will also hamper a person’s credit score, so it is wiser to make timely repayments.
- Quick Doorstep Service
Muthoot Finance may offer customers, doorstep loan service for valuation, especially if the applicant possesses a lot of gold and it is unsafe to carry this to the branch office. A team member of the NBFC will fix an appointment for the verification and gold valuation procedure.
On the day, an expert who knows how to evaluate gold will give a visit and decide the amount per gram of gold. Once the process is complete, a loan amount will be finalized. On loan approval, the amount will get transferred to the borrower’s bank account.
The above-mentioned pointers will help one get an insight to the Muthoot gold loan scheme, and why it is preferred in India.