If you are planning on applying for a gold loan to cover your immediate financial expenses, you can easily calculate interest payable using a gold loan EMI calculator. However, there are some facts about this interest calculation that you should know to get the most affordable rate.
5 Lesser Known Facts Regarding Gold Loans Interest Rate Calculation
Below are some interesting facts about gold loan interest rate that you should know:
- Interest Charged Is Inversely Proportional to Inflation
During inflation, many people invest in gold as it acts as a protective shield against the depleting value of currency. Thus, there is a sharp increase in price of gold in the market. This serves as a basis for lenders to offer gold loans at a comparatively lower rate than what they would have charged in other situations.
- Interest Charged Fluctuates with Market Value of Gold
The interest that a financial institution charges on gold loan is inversely proportional to the price of the market value of this yellow metal on the day of credit application. This implies that if its market value is high, then the interest charged on credit would be low and vice versa.
- Interest Charged Varies with Loan Amount Requested
Lenders take into consideration the credit amount that a borrower has requested while determining the interest rate. If this amount is high, then the interest charged on it may be low and vice versa. However, you must note that only a limited number of financial institutions follow this practice to lure customers.
- Interest Charged Depends on Purity of Gold
Some financial institutions determine interest in a gold loan on the basis of the purity of the jewellery pledged. If the metal is more pure, the interest charged on a loan against it is less. For example, you will have to pay a higher interest rate on 18-karat gold as compared to 24-karat gold.
- Interest Charged on Gold Loan Is of Two Types
There are two types of gold loan interest rates, namely fixed and floating. In case of a fixed gold loan interest rate, the interest rate stays constant. Hence, the interest, and subsequently the EMI of the credit stay constant throughout the entire tenure. Alternatively, in case of a floating interest rate, the EMI and interest rate keep changing with market price.
So, you can easily optimise the above factors to get a gold loan at an affordable interest rate. You can also check out some lucrative benefits of a gold loan that makes it a viable credit option during financial emergencies.
Advantages of Gold Loan
The benefits of a gold loan are as follows:
- Substantial loan amount up to Rs. 2 Crores to meet your financial urgencies.
- Part release of your gold on payment of an equal amount of instalments.
- Your gold will be kept safe in high-quality vaults that are monitored 24/7.
- You can select affordable EMIs as per your ease to repay the credit.
- You will not have to pay any additional amount on foreclosing or part-prepayment of your loan.
- The value of gold is calculated as per the market standards so that you can get its appropriate value.
- The application process is easy and you can complete it from the comfort of your home.
Considering these benefits of a gold loan, you can opt for one to meet your urgent need for finances. However, before that, you should check the eligibility criteria to avoid credit rejection.
Eligibility Criteria for Gold Loan
Below are some of the eligibility criteria necessary for a gold loan:
- Your age must be between 21 and 70 years
- You can be either a salaried or self-employed individual
- You can only pledge 18 to 24-karat gold
- For gold coins, the weight can be up to 50 grams
Once you tick all the eligibility criteria, you can follow some easy and hassle-free steps to apply online for a gold loan.
Steps to Apply for Gold Loan
You can follow the steps below to apply for a gold loan:
Step 1: Visit the official website of a financial institution.
Step 2: Navigate to the gold loan application page.
Step 3: Click on the ‘Apply Now’ button.
Step 4: Fill in the essential details.
Step 5: Upload the necessary documents.
Step 6: Click on ‘Submit’ button.
Once done, representatives will get in touch with you to explain further procedures. Additionally, you can keep the necessary documents ready to avoid issues while filling out loan application forms.
Documents Required to Apply for Gold Loan
Below are the documents that you will need to apply for a gold loan:
- Identity proof documents such as Aadhaar card, voter’s ID card, and driving license.
- Address proof documents such as Aadhaar card, utility bills, passport, NREGA job card, etc.
Once you know these facts, accordingly, you can calculate the interest rate using an online gold loan EMI calculator. These calculators are easy to use and provide instant, error-free results.