Why Are Long Term Gold Loans In Demand?

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WHY ARE LONG TERM GOLD LOANS PREFERRED?

The long term gold loans are preferred because the people do need some extra time to repay the loan. This is because not everyone can repay the loan in a short period of time if he is in debt. Also, the tenure of loan repayment depends on a lot of factors. A person will have a lower interest rate if the tenure of repayment is longer. That is why long term gold loans are preferred by a lot of people. The EMIs including the principal amount and the interest rate can be calculated with the help of a gold loan calculator.

WHY A GOLD LOAN IS A BETTER CHOICE?

A gold loan comes without any usage restriction unlike other loans. It also has a shorter time of processing which makes it different and better from the other loans. Because of all these reasons, a gold loan becomes a preferred choice for meeting financial emergencies and the financial shortfalls.

A gold loan is better than the other loans in the following ways-

Processing time- A borrower has to deposit a lot of documents which includes the income proof too. The verification of all these documents take a lot of time and therefore, the processing time is longer in other loans while in a gold loan, there is no need of any income proof, just the identity proof and the address proof is required and thus, the processing time is shorter and quicker.

Loan amount- The amount of loan in other type of loans varies from Rs. 50,000 to Rs. 20 lakh. The amount of loan in other loans depends on the credit score, credit repayment, tenure of repayment and a lot of factors while in a gold loan, the loan amount simply depends on the market value of the pledged gold. The maximum limit was 75% but now it has increased to 90% because of the pandemic of coronavirus. A lot of people have lost their jobs and that is why, The Reserve Bank of India took this step. The Muthoot Finance gold loan payment is a good option to choose.

Interest rate- The rate of interest on a gold loan is really affordable as compared to the interest rates of other loans. For instance, the interest rate on a personal loan ranges between 8.45%- 26% per annum while the interest rate on a gold loan ranges between 7.25%- 29% per annum. A gold loan is a cheaper option as compared to a personal loan.

Tenure of repayment- The tenure of repayment on other loans ranges from one year to five years or even seven years but for a gold loan, the tenure of repayment is from seven days to three years and some money lenders do offer a tenure of five years too. As a longer tenure of repayment results in higher interest rates, a gold loan is, therefore, a better and a cost-effective option for all the people who are confident that they will repay the gold loan in one to two years.

Repayment options- The repayment of the other loans such as a personal loan is in the form of equated monthly installments, which included the principal amount and the interest rate. On the other hand, a gold loan allows its borrowers to repay it in a variety of repayment options. The EMI based repayment structure is also designed according to one's needs.

Processing fee- The processing fee on a gold loan is as low as Rs. 10 or it can be around 0.1%-0.2% of the amount of loan whereas the processing fee in an unsecured loan such as a personal loan is around 3% of the amount of loan. The charges like the processing charges, foreclosure charges are the extra charges in a loan and no one wants that when a person is already in a debt.

Bottom line- The choice between a gold loan and the other loans depends on the needs of the borrower.

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