How To Calculate Gold Loan Interest Rates?

by Arjit Chalmela Finance Student

We invest in gold every year, irrespective of factors such as price volatility and market fluctuations. Such investments prove worthwhile while applying for a Gold Loan. It helps you fulfil your financial needs independently and takes care of all other essential needs. Gold is not only metal but also an investment product in India.

Whenever you apply at banks and other financial institutes, check the Gold Loan Interest Rates and compare them with the market. Choose an affordable loan repayment option against the gold security you deposit with them. Reputed banks and lenders are ideal for applying for loans as they offer the best schemes and security provisions.

The process

For calculating the total loan cost, use an online tool known as a Gold Loan Calculator. It is free of cost and is available on all lender websites. It calculates the monthly Equated Monthly Instalments payable against the loan within seconds.

Principal amount

Enter the principal amount offered by the bank or lender. Check the minimum and maximum loan amount. Urban and rural areas have varying loan limits. Banks and financial institutes have differing eligibility criteria and loan approval.

Repayment tenure

You must enter your repayment term in the following field. Typically, banks offer a minimum loan repayment term of six months and a maximum of 24 months, thus allowing you to repay the amount flexibly through EMIs.

Interest rate

Add the interest rate offered by your lender. Click ‘Enter’ and compute the EMI payable against the loan. The variables are adjustable according to your preferences and affordability. Use the tool flexibly and enter as many combinations to arrive at a reasonable rate.

Tips for choosing the loan

Gold Loans are the best choice to meet your emergency fund requirements. However, understand that you are borrowing money against your gold, which you need to repay with interest. If you default on the repayment, your lender has the authority to confiscate your gold to make up for the loss. Hence, be cautious while opting for any secured loans.

For the best Gold Loan Interest Rates, ensure you know the market rates and other relevant factors. Like other loans, there are certain add-on charges, including processing fees, documentation charges, notice charges, etc., associated with a Gold Loan. Understand them thoroughly.

Benefits

Gold Loans are a saviour during a financial crisis or disaster. Borrow the amount from the lender immediately after they assess your gold and keep it as collateral. Use the funds for education, buying a house or car, travel, etc., and fulfil your needs.