What is Gold Overdraft Loan Facility: Risk And Benefits

Indians always have had an emotional attachment with gold. Often passed down through generations, this yellow metal is not only considered auspicious but is also the symbol of prosperity. It has long been used as an investment option and a hedge against future uncertainties.

Gold loans have become quite popular in the recent times owing to simplified documentation, quick disbursals and all this while keeping your valuables safe. We, as Indians, have a special attachment to our gold, Think of it as making your gold ornaments work for you that would otherwise be lying in a locker. Whenever you are in need of funds, a gold loan can serve many purposes. One of the reasons gold loans have become the first choice of many is the low gold loan interest rate as compared to a conventional loan. And financing a gold loan from Muthoot is fast, easy and safe, ensuring complete peace of mind. It offers a wide portfolio of different kinds of gold loans with different gold loan interest rates. Both gold loan term loan as well as an overdraft against gold facility can be availed with attractive interest rates on gold OD. Check out your best suited gold loan.

Before deciding on availing a gold loan, you have to first decide on your financial requirement and also the gold loan tenure and gold loan interest rate you are comfortable with. Depending upon all of these factors, you can choose from the various gold loan schemes on offer.

Muthoot Finance’s Gold Loan Interest Calculator is a quick and convenient way to calculate your gold loan overdraft as well as gold term loan interest rate . You may either do it online or visit your nearest branch. All you have to do is input details such as name, email ID, contact number, state, pin code, type of the gold articles, the amount needed, and the approximate weight of your pledged jewellery.

Gold Overdraft Loan vs Gold Term Loan

In a gold overdraft facility, the lender will open an overdraft account in which the loan amount sanctioned against pledged gold is credited. Your gold loan amount is your overdraft. You can spend as much as you require up to the allowed credit limit. The gold loan interest rate will be applicable only on the amount you use and tenure you use it for. And the repayment of a gold loan overdraft is based on the amount utilized, period for which the amount was used and applicable gold OD interest rate.

A gold loan term loan is just like your traditional loans. You are sanctioned a specified amount against your pledged gold and for a specified tenure. Based on the gold loan interest rate, EMIs are calculated that have to be paid every month. Both NBFCs (non-banking finance companies) and banks offer this facility.

A gold overdraft facility or a gold term loan- it all depends upon your requirements.

Features of Gold Loan Overdraft facility

Some key features of a gold loan overdraft that makes it very attractive are:

Flexible payment options
Interest applicable only on the amount used and the tenure it is being used
Amounts can be withdrawn as and when required
Better suited for meeting sudden short term financial funding

However, if you decide to go with an overdraft against gold facility, it is important to weigh the pros and cons before finalizing it.

Benefits	Risks
Flexibility of using the loan amount as per your requirement	Inflation, global gold price changes etc could have an impact on the applicable gold rate.
Flexibility on the tenure of loan utilization	Less control over the loan amount withdrawn and subsequent repayments
Lump sum repayment can be done as opposed to EMIs.	Not very suitable for long term funding needs
Can be prepaid and closed at any time	Not very suitable for making planned expenses as opposed to EMIs
Better suited when monthly income for repayment is not guaranteed	Risk of reduction of credit limit
Flexibility of using the loan amount as per your requirement	Interest is calculated on a daily basis as opposed to monthly basis in a term loan
Better interest rate than gold term loan
Gold ornament replacement/release possible during the loan tenure unlike normal gold loan
You may shop online, transfer payments, and pay bills directly from the loan amount.
No end use restriction

About Muthoot Finance

Muthoot Finance, with their vast portfolio of gold loans, promises the best value for your gold, best gold loan interest rates, flexibility of both gold loan overdraft facility as well as gold term loan. The pledged gold ornaments are securely kept in strong rooms under CCTV surveillance. Once the gold loan is fully repaid, your gold is safely and quickly returned. Whatever be your needs, your nearest Muthoot branch has the perfect solution.