A Beginner’s Guide to Gold Loans: How Does It Work?

What is a Gold Loan?

A gold loan is a type of secured loan where you pledge gold ornaments as collateral to borrow money. The loan amount is determined by the value of the gold, and you can repay it in installments or as a lump sum with interest.

How Do Gold Loans Work?

1. Gold Pledging

• Borrowers submit gold ornaments to the lender.
• The purity and weight of the gold are evaluated.

2. Loan Amount Determination

• The loan amount is based on the gold's market value and the lender's Loan-to-Value (LTV) ratio.
• Example: If the LTV is 75%, you can borrow ₹75,000 for gold worth ₹1,00,000.

3. Approval and Disbursement

• Minimal documentation ensures quick approval.
• The loan amount is disbursed via cash, cheque, or bank transfer.

4. Repayment

• Borrowers repay the loan as per the agreed schedule.
• Pledged gold is returned upon full repayment.

Why Choose Muthalagu Finance for Gold Loans?

• Quick and Easy Process: Instant loan approval with minimal paperwork.
• Flexible Repayment Options: Choose from EMI plans, bullet repayment, or interest-only plans.
• High Loan Amounts: Borrow up to 75% of your gold's value.
• Secure Storage: Bank-grade vaults and insurance for pledged gold.
• Competitive Interest Rates: Designed to minimize financial burden.

Gold Loan Process with Muthalagu Finance

Step 1: Application

Visit the nearest branch or apply online. Submit basic documents such as ID proof, address proof, and recent photographs.

Step 2: Gold Valuation

Experts assess the gold’s purity and weight to determine eligibility based on market value.

Step 3: Loan Approval

Loans are approved instantly. Sign the agreement and receive funds immediately.

Step 4: Repayment

Choose a repayment plan that fits your financial needs. Payments can be made online or offline.

Step 5: Gold Retrieval

Retrieve your gold safely from secure vaults after full repayment.

Eligibility Criteria for Gold Loans

• Age: Applicants must be at least 18 years old.
• Gold Collateral: Ornaments with a purity of 18 karats or above.
• Documents: Basic ID proof (Aadhaar, PAN) and address proof.
• Income Proof: Not required, as gold serves as collateral.

Benefits of Gold Loans Over Other Loan Types

Feature	Gold Loan	Personal Loan	Credit Card Loan
Collateral Required	Yes (Gold)	No	No
Interest Rates	Low	High	Very High
Processing Time	Instant	2-7 Days	Instant
Loan Amount	Based on Gold Value	Income-Dependent	Credit Limit Dependent
Eligibility	Basic Documents Only	Income & Credit Score	Credit Score

FAQs About Gold Loans

1. How much gold do I need to pledge?

The amount depends on the loan value. Higher loan amounts require more gold as collateral.

2. Can I use gold coins for a loan?

Most lenders, including Muthalagu Finance, only accept gold ornaments, not coins or bars.

3. What happens if I cannot repay the loan?

In case of non-repayment, the lender may auction the pledged gold after notifying you.

4. Is my gold safe during the loan tenure?

Yes, we ensure secure storage in high-security vaults with full insurance coverage.

5. Can I foreclose my gold loan early?

Yes, foreclosure is allowed, often without additional charges.