Procuring an instant loan is easy in today’s digital world. Loan approval is not an issue with a financing institution till your credit score supports you. However, if an individual has no credit history or low CIBIL score, no lender would prefer to propose loan offers to him/her. In such a case, if lenders make a loan offer, the loan terms will not be easy, like high-interest rates and low LTV (Loan-to-value) ratio.
Here your savings in gold can help you. While gold is associated with the traditional values of Indians, you can arrange funds to meet your sudden financial obligations. Selling the gold is not the only option to arrange funds, but you can apply for a gold loan on EMI with a Muthoot FinCorp. A gold loan is a secured loan. The loan seeker can avail of required money by collateralising their gold in physical form like jewellery, coins, etc.
What is CIBIL Score and Credit History?
CIBIL score is granted by one of the credit agencies, TransUnion CIBIL (Credit Information Bureau (India) Ltd), to the borrowers.
- The score is based on their treatment with earlier debts, like loans or credit card bills. Credit rating agencies maintain records of the financial activities of individuals as well as organisations. CIBIL score ranges between 300 (the lowest) – 900 (the highest).
Lending institutions first check the loan seeker’s CIBIL or credit score before any other factor related to loan approval. They require a minimum score of 750. Every lender considers the CIBIL score before granting or rejecting a loan or offering credit cards to the applicant.
Gold Loan – The Solution for No or Low Credit Score
It is effortless to get a gold loan on easy terms. Even without credit history or a low CIBIL score, you can access funds against a gold loan on EMI.
- The simple reason that enables gold loan providers to neglect the credit score is your collateralised gold, which gives the lender a sense of security against default. Your pledged gold ensures the lender’s loan principal repayment. If the lender faces the circumstances leading to a default on the loan , he can recover the loan with the liquidation of pledged gold.
- A gold loan can help you to create a credit history if you have not utilised any credit or loan facility and lack the CIBIL score.
Thus, a gold loan is one of the best options for an individual looking for financing with a low CIBIL score requirement.
Eligibility for a Gold Loan
As explained, there is no need for a credit history to get a gold loan. You should know about the other factors considered for gold loan eligibility:
- An earning hand can apply for a gold loan. You should be self-employed, salaried, or a businessperson.
- The applicant’s age should be 21 – 60 years.
- The applicant should have valid KYC documents – PAN card, address proof and ID proof. Check here for a complete gold loan documents list.
You can avail of as high as Rs. 50 lakhs against a gold loan on EMI even if there is no credit history.
- The loan amount or LTV depends mainly on the fineness of Gold and the quantity of the gold to be pledged. The better the quality of the gold, the higher the loan amount.
- Make sure your gold should be between 18-24 karats to avail of a gold loan.
Benefits of a Gold Loan include:
- Easy EMIs and different repayment options, including pay only interest during the loan tenor.
- No restriction to end-use of funds; Use it for medical emergencies, educational expenses, business-related financial needs, and others.
- Lower interest rate comparatively; Gold loan interest rates start @57 paise per month only with reputed NBFCs (Non-banking Financial Companies).
- No foreclosure charges to repay the gold loan on EMI even before ending the loan tenor
- High LTV of up to 75% of the pledged gold.
Conclusion
Investing in gold is a common practice in India that helps households during a financial crisis. You can get a quick gold loan on EMI even if your credit history is not in favour. Lending institutions need not your CIBIL score as you are pledging your valuable asset – gold. Make sure you make timely payments against loan EMIs to improve your credit score or create your credit history.
