Gold loan (also known as a loan against gold) is a secured loan for many Indian borrowers as they can get an easy loan against the gold articles (ranging from 18 carats to 24 carats) with the bank as collateral security. Established in 1939, Muthoot Finance Gold Loan provides hassle-free gold loans with minimal documentation required. What makes a gold loan a prudent choice for the borrowers is the fact that even those with not-so-great credit or CIBIL scores can also apply for the gold loan as Muthoot Finance can always legally retain the overdue loan amount from the deposited gold in case of non-payment of charges. Muthoot Finance Gold Loan Interest Rate is 11.70% per annum. Muthoot Finance Gold Loan Rate per Gram entirely depends upon the quality/purity of the gold being kept as collateral security. Since the gold rate changes daily, the Muthoot Finance Gold Loan Rate per Gram also varies accordingly. After calculating the value of your gold using the Muthoot Finance Gold Loan Calculator, the bank sanctions you the loan amount and keeps some amount as a security margin amount. However, a Muthoot Finance Gold Loan can affect your CIBIL score in various ways. This blog will help you determine the influence of the Muthoot Finance Gold Loan on your CIBIL score.
Muthoot Finance Gold Loan Application
Even applying for a gold loan can affect your CIBIL score negatively with a few points. Every time a borrower applies for a Muthoot Finance Gold Loan, a ‘hard inquiry’ is established by Muthoot Finance. Hard inquiry refers to the practice where Muthoot Finance requests access to your credit report or CIBIL score from credit bureaus across India in order to determine whether to approve your loan application or not. A few inquiries are not necessarily a threat to your CIBIL score as it is a mandatory step in the gold loan approval procedure. However, multiple hard inquiries in a short span of time into your credit report could result in the reduction of your CIBIL score. This happens because it means that you are either hungry for credit (desperate for money) or borrowing more than actually required.
Repayments of Muthoot Finance Gold Loan
Once your gold loan application is approved by Muthoot Finance and your loan amount has been sanctioned, it is your legal obligation to repay the loan amounts in a timely fashion according to the terms and conditions mutually decided by you and Muthoot Finance. Succeeding in making the repayments of the loan before the due date will result in the enhancement of your CIBIL score. Similarly, failing to make the payments on time will reduce your CIBIL score substantially.
Timely Payment of Muthoot Finance Gold Loan
To build a good credit score, you must try to make the loan payment before or on time. Borrowers who pay their loan EMIs on time display responsible credit behavior and are more likely to get their future loan applications approved without any hassle. Muthoot Finance prefers such borrowers for gold loans.
Lone Default of Muthoot Finance Gold Loan
You’ll be classified as a loan defaulter if you do not oblige by the loan contract of Muthoot Finance Gold Loan. Even a single-day delay gets reported to all credit bureaus and will substantially affect your CIBIL score. It can also lead to penalty charges and repeated failures of timely payments empower Muthoot Finance to legally acquire your gold articles.
Bottom Line
We have tried to explain in a detailed manner way that can affect your CIBIL score while applying for Muthoot Finance Gold Loan. This will help you from avoiding penalty charges, legal actions, and above all, lowering your CIBIL score. Therefore, do not forget to repay your Muthoot Finance Gold Loan on time.
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