The interest rate a borrower would have to pay on the loan accepted is the main deciding factor used by customers when choosing one lender over another when taking out any type of loan. The cost of taking out a loan in the form of EMIs will increase if the interest rate is higher, as it would be for any other loan, such as a gold loan.
With a gold loan, you can obtain the loan amount you want through using your gold jewelry as security. For various lenders, the per-gram interest rate on the gold loan varies. In order to choose the loan with the most affordable interest rate per kg, it is advisable to compare across various platforms.
Let’s examine the methods used to calculate the loan interest rate as well as the factors that affect it.
How is the Interest Rate on a Gold Loan Calculated?
Based on the loan amount you want, the interest rate for a gold loan is determined. With a reputable firm, you can choose from a wide range of appealing loan per gram options according to your loan needs and enjoy a nice loan experience.
Recognizing Per Gram Rate
To determine the amount of loan you are eligible for every gram of gold pledged, visit the official website and use their free online gold loan interest rate calculator.
You can either enter the desired loan amount, and the calculator will show you how much gold you will need to commit to get there.
You may also enter the exact grammes of gold you want to use as collateral and the calculator will tell you how much of a loan you qualify for solely on those grams of gold.
It is significant to remember that
- Based on the price of 22-carat gold, the interest rate on a gold loan is determined per gramme.
- The calculator’s interest rates are for 100% Loan To Value (LTV) schemes.
- Factors That Influence the Interest Rate on Gold Loans
- When establishing your interest rate on a loan per kg, a number of criteria are taken into consideration. These elements are:
The loan sum is:
The key determining element for your loan per gramme rate of interest is the principal loan amount you wish to take. In consequence, the value of the gold jewelry you are guaranteeing has a direct bearing on the overall loan amount you are eligible for. Typically, you can borrow anywhere from 60 to 90% of the declared worth of your gold. Before applying for a loan, it is a good idea to evaluate your true need because a greater loan amount will result in a higher interest rate.
Monthly income of the Borrower:
Since a loan is a secured loan and you receive a proportion of the gold you have pledged as a loan amount, there aren’t many prerequisites for eligibility. To make absolutely sure that the borrower can make the EMI repayments on time, the lender may consider the borrower’s source of income when establishing the loan’s interest rate. The rate of interest on the borrower’s loan is lower if he has a source of steady income.
The lender’s procedures for benchmarking
The benchmarking techniques employed by the lender greatly influence the rate of interest on loans secured by gold. The borrower’s EMI will fluctuate every three months if the interest rate on a loan for a particular lender is tied to the Rep Rate Lending Rate (RRLR). In contrast, if the interest rate is tied to the Market Linked Lending Rate (MLLR), it will fluctuate for the borrower every six months or once a year. In order to understand how the interest rate you must pay will be impacted, it is important to understand the benchmarking approach utilized by a lender.
The EMI you must pay toward your loan depends on the price of the loan per gramme. You may guarantee a reduced interest rate and, thus, a reduced EMI on your gold loan by actually listening to the variables selected.