COVID-19, the pandemic has affected almost all the sectors of the economy. After the months of lock down, people still can't catch up with their livelihood. Due to this pandemic, the most affected section of the society is the middle class. Now the common man are done spending their savings and all they have got is their investments. These are the times, for which people buy gold so that they would use them in their critical times.
Now, everyone is going towards taking a loan on their gold. Also gold prices are at their peak. They work as a Symbol of hope For personal use and many small scale businesses. Taking a good loan is a reasonable option for those people who want to fulfill their needs. Therefore taking advantage of this opportunity, muthoot finance gold loan and others lenders have started reaching customers to give gold loan propositions.According to banks there is a huge demand of gold loan, by small scale businessmen, traders to restart their work after the lock down. Gold loans are basically short tenure loans used as a capital investment by small scale businessmen.
George Alexander Muthoot, MD, Muthoot Finance says, “When gold is seen as a commodity whose price is going up, people opt for gold loans, as it is one of the easy products to collateralize and avail bridge finance for their immediate requirement.”
The rise in the gold price is not only a good news for the new loan borrowers, but also for the existing ones because more the market value of gold increases, more loan amount can be raised by them against their deposits, which depends on the case-by-case basis.
Keep in mind that many banks do not accept gold bars or biscuits as things which can be accepted to grant loans upon, but exceptions are those coins issued by the bank itself. Also, if anyone is unable to pay loan at one go, EMI (Easy Monthly Installments) schemes are also available for them.It has many advantages including faster processing, lower gold loan interest rates, no processing fees, no foreclosure charges. Most importantly, no income statement is required and no credit score is needed.
These words are a huge relief to loan borrowers. In other loans, sanction is decided when the borrower can repay the loan or not but in this system, loan amount is decided on the current market value of the gold. Just get to a lending institution, and pledge your gold ornaments and the required documents there. The lender performs the purity checks, weight of the gold and on the basis of them, he determines the market value of that gold. Loans can be sanctioned up to 80 percent of the market value of the gold pledged. Once it’s done, money is in the hands of the borrower and he is ready to invest in his business as a capital.
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