Gold Loan interest rates: Calculation procedure

We invest in gold every year, irrespective of factors such as price volatility and market fluctuations. 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 known for years in India.

Whenever you apply at banks and NBFCs, check the Gold Loan interest rates and compare them with the market rate. Choose an affordable repayment option against the security of gold you deposit with them. Reputed banks are ideal for applying for Loans as they offer the best schemes and security provisions.

Process

To calculate the total cost of your Gold Loan, you need to use an online tool known as the EMI calculator. It is free of cost and is available on all banking websites. It calculates the monthly EMI payable against the borrowing within seconds.

Principal amount

First, you need to enter the principal Loan amount offered by the bank. Check the minimum and maximum amounts to be precise. Urban and rural areas have varying limits. Banks have differing criteria for eligibility and approval. Compare and assess which scheme suits your financial and repayment capacities.

Repayment tenure

You need to enter your repayment tenure in the next field. Typically, banks offer a minimum Loan repayment tenure of six months and a maximum of 24 months, thus allowing you to repay the amount flexibly in Equated Monthly Instalments.

Interest rates

The final step is to enter the interest rate offered by your bank. Click on ‘Enter’ to calculate 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, you must understand that you are borrowing money against the pledged collateral, which you need to repay with interest. If you default on the repayment, your bank has the authority to confiscate your gold to make up for the loss. Hence, be cautious while opting for a secured Loan. To get the best Gold Loan interest rates, ensure you know the market rates and other relevant factors.

There are certain add-on charges, including processing fees, documentation charges, notice charges, etc., associated with the borrowing. Understand and analyse them thoroughly before finalising the scheme.

Benefits

Indians believe in earning money and investing it in different areas. Gold Loans are a saviour during a financial crisis or disaster. You can borrow the amount from the bank immediately after they assess your gold and keep it as collateral. Use the funds for education, buying a house or a car, travel, etc.