Gold Loan With EMI Or Overdraft – Which One To Choose?

Most banks and many NBFCs today offer gold loans to their customers along with many attractive schemes. The two most common and popular schemes are ‘Gold Loan with an EMI option’ and ‘Gold Loan with an Overdraft facility. And most gold loan companies also offer an instant online facility. Customers can easily input simple details such as the amount required, loan tenure, and approximate weight of the pledged gold in the online gold loan interest calculator to calculate the applicable interest rate. Further, they can use the online gold loan EMI calculator to calculate the estimated EMI on the proposed loan.

Availing Muthoot Finance Gold Loan Online

The recent pandemic has surged the need for digitization in a big way. Muthoot Finance has brought its vast portfolio of gold loan schemes right to your screens. Whether it is for personal needs or your dream startup, Muthoot Finance has a gold loan to suit every need.

With a few simple steps, you can apply for a gold loan from the convenience of your home.

Step 1: Download the iMuthoot application on your smartphone or visit https://www.muthootfinance.com/gold-loan
Step 2: Click on the Gold Loan Calculator icon on the app or type https://www.muthootfinance.com/gold-loan/calculator on your desktop browser.
Input details such as your name, state, email id, gold type, and other mandatory details as well as the approximate weight of the gold you are willing to pledge. Click on the calculate button. The calculator shall display the loan amount you are eligible for, based on your inputs.
Step 3: Go through the various gold schemes on offer. You can compare the interest rates on various schemes on https://www.muthootfinance.com/gold-loan/interest-rate. Select the one that best suits your requirements.
Step 4: Once you have finalized the loan scheme, calculate your estimated EMI using the gold loan EMI calculator. Input details such as loan amount and repayment tenure to get the EMI amount.
Step 5: If all your requirements of loan amount and EMI are met, fill out the online form and submit it. One of our knowledgeable and experienced executives shall connect with you to guide you further in the process.

Difference Between Gold EMI Loan and Overdraft Against Gold Facility

When you choose a Gold Loan with an EMI option, the rate of interest and tenure is fixed in the loan. The loan amount shall depend upon the value of the pledged gold articles. Depending upon the lender, the loan amount extended shall be a percentage of the value of the gold. The Reserve Bank of India has allowed gold loan companies to increase this Loan-to-value ratio from 75% to up to 90%. The repayment of a gold EMI loan is done in fixed installments.

In contrast, in an overdraft against gold facility, a credit limit is set by the lender, depending upon the value of the pledged gold articles. Individuals have access to the funds up to the set credit limit which they can choose to withdraw at any time. Repayment of a gold overdraft facility can be done at the customer’s convenience.

Comparison Between Gold EMI Loan and Overdraft Against Gold Facility

Let us look at the various aspects of these two gold loan variants:

	Gold Loan On EMI	Gold Loan Overdraft
Flexibility	Less flexibility as the borrower receives the loan amount in one go; they can either spend the entire amount at once or in intervals.	More flexibility as the borrower can utilize the funds, up to the set credit limit, as and when required
Interest Rates	The interest for the gold loan with EMI are fixed for the full tenure of the loan.	The interest for gold loan overdraft is levied on the amount utilized and for the tenure it was utilized for.
Repayment	Helps in reducing financial stress by making planned repayments in a planned manner. EMIs are a great way of keeping track of all payments.	There’s no fixed repayment schedule and the borrower might get overwhelmed while paying large sum as repayment at one.
Pre-closure	Individuals can close their loan anytime by repaying the outstanding credit in a lump sum.	If individuals repay the loan amount before a given period, they might have to pay foreclosure charges.
Convenience	Restrictions on the channels through which the borrower can withdraw the funds	Highly convenient as the borrower has multiple ways of accessing and spending the sanctioned funds.

Which Option is Better?

There’s no single way of determining which option between a gold EMI loan and an overdraft against gold facility is better. It all depends on your requirements and preferences. A gold loan overdraft facility is better for individuals with short term funding needs or those unsure of how much loan amount they require. A gold loan with an EMI option is better suited to individuals who want to plan their expenses as well as repayments and the requirement of using the loan amount is immediate.

Visit your nearest Muthoot Finance branch to avail gold loans at the most competitive interest rates. Unlock the power of your gold!