The organised gold loan market continues to hold its promise of offering convenient financing solutions to loan seekers. It is expected to reach INR 7,557 billion by FY2024 with the increasing demand for gold loans. Gold loans are known for their easy terms and numerous facilities for borrowers. One of those facilities is gold loan renewal.
Gold loan renewal is the facility when the entire loan amount and interest have been paid to the lender. An individual with an existing gold loan can take another gold loan with the same lending institution against the same gold valuables.
Gold loan renewal is considered an excellent option for borrowers seeking quick financial support. A borrower can pledge the same gold valuables or new ones.
Loan Renewal vs Loan Extension
A gold loan extension is different from a gold loan renewal. In the case of a gold loan extension, borrowers request the lending institution to increase the tenure on the existing gold loan.
Let us say a borrower has the liability of a gold loan for a tenure of one year, but the loan has not been paid in full at the end of the loan tenure. The lender can extend the gold loan repayment tenure at the borrower’s request.
On the other hand, gold loan renewal means renewing the existing loan contract with the lender. The lender can renew a gold loan at a lower interest rate depending on the borrower’s repayment history.
Advantages of Gold Loan Renewal Facility
Pre-evaluated gold assets
Professionals evaluate gold items to examine their purity and estimate their correct market price. Gold valuation requires both human expertise as well as technology. It is a time taking task for lending institutions. They follow a rigorous process to determine the fineness and the accurate value of gold. The valuation of soldered gold jewellery and solid gold jewellery is different. The loan against pre-evaluated gold saves time and money.
Familiarity with the loan terms
A borrower already knows the terms and conditions of the existing lending institution for gold loans. Also, the lender is aware of the borrower’s repayment capacity. It helps borrowers to decide on the loan amount and loan tenure. The lender can also decide on loan terms to be offered to the borrower quickly.
Instant loan sanction
The documents required for the gold are already with the lender. The purity test of gold and the document verification has already been completed. Therefore, the gold loan renewal process can be completed quickly, and the loan can be sanctioned and disbursed on the same day.
The benefit of existing relationship with the lender
If borrowers can maintain a good relationship with the lender, it brings negotiating power to them. An existing relationship with the lender allows you to get lower interest rates and better repayment terms on your gold loan renewal.
What to consider while Renewing Gold Loan
Loan fee: A loan renewal may bring a processing fee. Look at the costs involved in gold loan renewal. Muthoot Gold Loan processing fee starts at just Rs. 20 based on the chosen scheme.
Value of your gold items: The value of the pledged gold may be changed since it was pledged for the existing loan. It is recommended to assess the current value of the gold to get the most out of it. You can avail of a loan amount of up to 75% of the gold pledged against basic KYC documents required for the gold loan.
Understanding the EMI on Gold Loan and its Eligibility
The gold loan EMI and instalment depends on the following several factors:
- The choice of the gold loan scheme offered by the lender.
- The loan amount a borrower requires
- The repayment tenure
- Applicable interest rates
- Gold fineness
A loan-seeker can check the eligibility for the gold loan using the gold loan EMI calculator or Gold Loan interest calculator and the amount based on the above factors.
Access the Gold loan EMI calculator and enter the following information:
- Weight and type of gold
- Preferred repayment tenure
- Desired loan amount
The calculator will assess the entered values and show the EMI value. To come to a comfortable EMI value, adjust the variables.
Get out of financial trouble with an easy gold loan renewal facility. Gold loans of reputed lenders like Muthoot Gold Loans allow borrowers to repay the loan without incurring any foreclosure charges.