In this post, I will list down various gold loan products from Muthoot Finance. We have done a primer on gold loans in an earlier post. We have discussed a gold loan product from Axis Bank too. Coming to Muthoot Finance, you will be amazed at the number of loan products a gold loan company like Muthoot Finance can have. To be honest, I was shocked. I thought there will just be a product or two. There were more than 10 products on their website. In my opinion, the high number is merely a marketing gimmick. However, as a potential borrower, this is the least of your concern. All you need is a loan product that suits your needs.
Gold loan products from Muthoot Finance
| Scheme | Minimum Loan Amount | Maximum Loan Amount | Benefit for timely payment | Remarks |
| Muthoot One Percent Loan | 1,500 | 50,000 | No | Lower LTV, Lower Interest Rate |
| Muthoot Ultimate Loan | 1,500 | No Limit | Yes | Higher LTV, 2% rebate on timely payment |
| Muthoot Delight Loan | 1,500 | 2,00,000 | No | Nothing specific |
| Muthoot High Value Loan Plus (MHP) | 10,00,000 | No Limit | No | Primarily for Business community |
| Muthoot Advantage Loan | 1,500 | 5,00,000 | No | Nothing specific |
| Muthoot Premier Loan | 1,00,000 | No limit | Yes | 3% interest rebate for timely payment |
| Muthoot Overdraft Scheme (MOS) | 2,00,000 | 50,00,000 | No | For business community. Interest to be paid only on the utilized amount |
| Muthoot EMI Scheme (MES) | 20,000 | No limit | No | Tenor up to 36 months, EMI based payments |
| Muthoot Mahila Loan | 1,500 | 50,000 | No | Exclusively for women |
| Muthoot Super Loan | 1,500 | 99,900 | Yes | 2% rebate on timely payment |
| Muthoot High Value Loan (MHL) | 3,00,000 | No Limit | No | For business community |
Interest rates on gold loan products from Muthoot Finance
| Scheme | Up to 1 month | 1-3 months | 3-6 months | 6-12 months | >12 months |
| Muthoot One Percent Loan | 12% | 18% | 21% | 24% | NA |
| Muthoot Ultimate Loan | 24% | 24% | 24% | 24% | NA |
| Muthoot Delight Loan | 15% | 20% | 23% | 26% | NA |
| Muthoot High Value Loan Plus (MHP) | 22% | 22% | 22% | 22% | NA |
| Muthoot Advantage Loan | 18% | 22% | 24% | 24% | NA |
| Muthoot Premier Loan | 20.50% | 21.50% | 22.50% | 23.50% | NA |
| Muthoot Overdraft Scheme (MOS) | 19% | 19% | 19% | 19% | NA |
| Muthoot EMI Scheme (MES) | NA | NA | 21% | 21% | 21% |
| Muthoot Mahila Loan | 12% | 15% | 20% | 24% | NA |
| Muthoot Super Loan | 24% | 24% | 24% | 24% | NA |
| Muthoot High Value Loan (MHL) | 16% | 18% | 20% | 22-23% | NA |
Points to Note
- Loan Tenure cannot be less than 7 days.
- Minimum Loan Amount is Rs 1,500. Respective products may have other minimum limits.
- Partial Prepayment of loan amount is permitted. There is no prepayment penalty.
- You do not need a guarantor for the loan.
- All the loan schemes except for Muthoot EMI scheme has a loan tenure of 12 months. The tenor for EMI scheme can go up 36 months.
For more on loan interest rates and FAQs on Muthoot gold loan, please visit Muthoot Finance website.
Not all types of loans may be available at all the branches. Muthoot Finance has provided for three regions viz, Kerala, Outside Kerala and Delhi. Rates for the various loan schemes may differ slightly across regions. It is also possible that some of the schemes are region-specific. For instance, Muthoot Premier Loan is available only in the Delhi region.
Note: Please understand descriptions of some of these products were not very clear from the website. Additionally, a few pieces of information on Muthoot Finance website was a bit conflicting. Therefore, in case you are looking for a gold loan from Muthoot Finance, you are advised to do greater research before choosing the best loan product from Muthoot.
Lower the Loan to Value ratio for your gold loan, lower the interest rate you pay. With a lower LTV ratio, the gold loan company has reduced its risk. With a lower LTV, the gold loan company has better protection against volatility in gold prices. Consider a scenario where the borrower defaults and the gold prices correct sharply. In such cases, the value of security may not be enough to square off the principal and accrued interest. With a lower LTV, the gold loan company has increased its cushion. Therefore, the loan company also passes on the benefit to the borrower in the form of lower interest rate. RBI caps the LTV of gold loans at 75% of the value of the gold offered as collateral.
Note: Muthoot has not explicit provided the LTVs for various types of loans. However, given the description of various products and the difference in rates of interest for various products, you can get this idea.
If you agree to pay interest on a regular basis, you can reduce the cost of your loan. For many of its offerings, Muthoot Finance offered rebate on interest payments if you made regular interest payments. Another point, albeit not as conclusive, is that the gold loans may not really be cheap. Since the loan is secured, I expected that the rate of interest would be low. However, the rate of interest can be as high as 24% p.a. It is quite possible that you can get a cheaper personal loan. Even Peer-to-Peer lending platform may be an option. It appears that the Muthoot Finance knows that gold loan is the last resort and are charging the interest rate accordingly.
You always have an option to sell your gold rather than taking a gold loan. To be honest, the interest rates for most of these gold loan products are simply astounding. Frankly, unless you have an emotional attachment with your gold/gold jewellery, you may be better off selling the gold rather than taking loan against it. After 6-12 months, when you have money in your hand, you can buy back the gold. You shouldn’t forget various other charges such as processing fee etc. applicable on the gold loans. Therefore, before contemplating loans at such high rate of interest, you must consider selling off the gold too.
Factors to Consider When Selling Gold vs Taking a Gold Loan
- An aspect to note is that you get loan only for the value of gold. Making charges for the jewellery are ignored. When you try to sell the jewellery, something similar happens. Therefore, when you take a loan and pay it back, you get back the jewellery. However, if you had sold the jewellery and try to buy similar piece of jewellery, you will have to pay making charges again. No such issue with gold coins.
- You might need loan for a small amount. However, it is possible that the jewellery item is quite expensive. In such cases too, you might consider taking a loan instead of selling it off.
- And yes, since it is a loan, you need to pay it back. Be sure of your cashflows before going for any kind of loan. If you don’t repay, bank/NBFC will anyways auction your gold and recover its loan.