Gold loan is an excellent funding option that allows borrowers to use the value of their gold assets to fund their planned or unplanned expenses. To apply for a gold loan, you pledge your gold assets to a lender and get the loan amount in return.
They consider the loan amount based on your gold weight and purity. Some lenders offer as much as 80% of the gold’s value as a gold loan. Once you repay the gold loan in full, you receive your gold assets back.
There are so many benefits you may receive by taking a gold loan. However, if you are considering pledging your gold assets to get a gold loan, one crucial factor to check is the gold loan rate offered by the lender. Below, you will understand which lender offers the best rate for gold loans.
Importance of Gold Loan Interest Rate:
Different lenders have different interest rates applicable to their gold loan offers. The interest rate that your lender offers makes a massive difference in your total gold loan cost. The higher the interest rate is, the more loan cost you will pay by the loan term-end. The processing fees and other charges are calculated based on the interest rate. That is why it is crucial to find a gold loan lender offering the best interest rate.
Factors Affecting Gold Loan Rate:
When applying for a gold loan, the lender determines your interest rate based on various factors. Some of them include:
Value of the Gold Assets:
The lender calculates your gold asset’s value depending on its weight and purity. Before approaching a lender, you may use a gold loan calculator to estimate your gold’s worth and know the loan amount you may get. Moreover, several factors determine your gold’s value, including its weight, purity, and current gold rate in the market.
Gold Loan Scheme Selected:
Many lenders have different gold loan schemes that borrowers may choose according to their requirements. Generally, the higher the loan amount you borrow, the lower the interest rate you may avail. Therefore, choose a gold loan scheme suitable to your funding needs and find the best lender offering the most reasonable interest rate.
The repayment plan you choose also makes a difference in your interest rate. Lenders offer different repayment plans that you may select according to your repayment capacity. Some popular plans include paying both principal and interest after a year, paying interest only and principal at the loan term-end, paying the interest upfront and principal later, and repaying the borrowed amount through regular instalments.
While applying for a gold loan, shortlist a few lenders and compare their interest rates. Use a gold loan calculator to know the loan amount you are eligible to apply. The goal is to find a reputed lender offering a transparent process for availing of a gold loan.
Besides that, explore the different gold loan schemes that the lender offers and opt for the most suitable one for your repayment capacity. Finally, don’t forget to read the terms and conditions carefully to avoid any last-minute surprises.