Even if you are having a low credit score still you can apply for a gold loan, unlike a personal loan. And till date, no organization or landing company has given the definition that how you should use your gold loan funds like personal loans. It totally depends on you or it is your wish that how you want to use this gold loan amount. Now let’s understand that what is the difference between a gold loan with EMIs option and a gold loan with an overdraft facility: Different customers have different types of needs so to fulfill them banks are offering two types of gold loan options. One is a gold loan with EMIs option and another is a gold loan with an overdraft facility.
Let’s understand first Gold loan with the EMI option:
The gold loan with an EMI option is a well-known method that our banks and NBFCs are offering for the past many years. You just apply for a gold loan and after getting the loan amount you starting paying your monthly EMIs. you repay your principal loan amount along with the interest amount. In this option, you get the fixed loan amount with fixed loan tenure from the bank. In both bank and NBFCs, you can apply for this option. Usually, banks provide the loan amount to 90% of the gold value. Most banks offer the maximum loan amount from INR 75 lakh to INR 1 crore with varied interest rates from 10% to 25%. Every bank has a different way to set their EMIs amount.
Let’s understand first Gold loan with the overdraft facility:
The gold loan with an overdraft facility might be an unknown topic for many. In this option, your gold loan amount provides you an overdraft facility. You can use your gold loan amount like you use your crest card. You can spend as much as you want anywhere like a credit card but till the allowed limit only. This process starts when you deposit your gold at the lender company and then they open your overdraft account. In some banks, they link your overdraft facility with your debit card. In some banks, lenders link the overdraft facility with your saving account. Or in some banks, they open your new overdraft facility account. Even in some lending institutions what they do that they will open your new overdraft facility account with similar features having the current account. Some other ways are also available to access the loan amount like you can access the loan amount by cheques which are issued separately for the overdraft account.
In the case of an overdraft facility, the interest rates are higher in comparison to the usual gold loan. And in the case of the EMIs option you need to pay EMI monthly. But in the case of an overdraft facility, you can repay the loan amount in a lump sum and can close the facility at any point in time. Both options give you a great number of benefits but in the case of an overdraft facility you can use the loan amount at any point in time, you can also overdraft the amount in a limited way which option is not available in the gold loan option with EMI. And also it gives you the convenience of using bank cards unlike gold loans with EMI options.
In the case of the EMI option the amount will get deposited in your saving account so you will not be able to distinguish between your own money and borrowed funds and also you will need to pay monthly fixed EMIs etc. But with a gold loan with an EMI option, you will be able to plan your monthly budget. You will get save from the situation of overspending. You will save more by paying a lower rate of interest. Both the options can offer by various banks like Muthoot Finance Gold loan, etc.
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