As a secured loan, gold loans can be beneficial in meeting short-term financial requirements. It comes with repayment flexibility and easy to meet eligibility criteria. Moreover, unlike other financing options, an individual’s credit score does not play a major role in availing a gold loan.
Nevertheless, borrowers can follow the below-mentioned tips to secure low gold loan interest rates and enjoy maximum benefits.
5 Tips to Avail the Lowest Gold Loan Interest Rate
Assess the required loan amount
The loan amount that one opts for from a lender directly impacts the interest rate of a gold loan. As per the RBI’s latest instruction, financers allow up to 75% of the loan value after checking the market value and the purity of gold.
Individuals have to pay a higher interest rate for a higher principal amount in gold loans like any other secured financial credit. Individuals need to refrain from taking the extra amount from financers. Unable to repay the debt may lead to loss of gold assets pledged to lenders.
Checking the current market value of gold
The current market value of this yellow metal plays a crucial role in determining the gold loan interest rate. Besides the purity factor of a gold asset, financers also check the current market value to determine the interest rate. To obtain a competitive gold interest rate, one needs to check the market price very carefully.
The key to getting a high loan amount is to check regularly when the market price of gold is at its peak. However, when the market price of gold falls, the interest rate also lowers to attract potential individuals.
Look for easy eligibility criteria
Unlike other financial credits, gold loans have very minimal criteria for approval in the case of monthly income. For different types of loans like home loans, etc., borrowers’ monthly income plays an important factor in approving loans. But for gold loans, lenders check whether a borrower’s monthly payment is stable and high.
To obtain a competitive loan against gold interest rate, borrowers need to ensure that they meet the benchmarks for the monthly income set by the financers. With higher income, individuals can assure lenders that they can repay on time, and there won’t be cases of EMI defaults. For fast approval of a gold loan, individuals can also state the other sources of income to the lenders.
Comparing various financers
Another way to get a low gold loan interest rate is by comparing various financiers. For this, individuals need to visit multiple financers’ websites and note down the rates. Then, compare their rates and other features.
Additionally, individuals can use an online interest rate calculator for gold loans to get a competitive interest rate. Individuals can see the changes in the payable amount with the increase or decrease in the interest rate. And based on that, individuals can make an informed decision.
Pledging high-quality gold
Lenders check the quality of gold to determine its interest rate. Individuals need to ensure that the pledged gold must be of high quality. The standard that a lender may seek is 18, 22 and 24 carats. Thus, the purity of the gold items that one pledges is another vital factor in determining the applicable interest rates on this credit instrument. Lenders check the purity of the pledged gold by using a carat meter. Therefore insure to pledge high purity gold for a lower gold loan interest rate.
How to apply for a gold loan?
Individuals can apply for a gold loan either online or offline. For offline process, individuals can visit a nearby branch of the chosen lender carrying gold ornaments along with the documents.
If individuals aren’t comfortable carrying gold ornaments, they can also opt for an online application mode. For online applications, they need to follow the steps below:
1: Visit the website of the chosen lender.
2: Under the gold loan application form, fill in the credentials like name, phone number, amount of loan and weight of pledged gold etc.
3: Input the OTP generated in the phone.
4: Submit the form.
After the successful submission of the form, a representative from the lender will contact and assist further.
The ability of borrowers to repay the principal and interest amount in time closely depends on a low gold loan interest rate. Besides following these above tips, individuals need to pay attention to the market situation before opting for a financial credit like a gold loan.