Compare Gold Loan Interest Rates In India

Before availing a gold loan, you must know the interest rates & the various factors which affect the gold loan interest rate. Read to know the complete details!

11 Jan,2024 12:44 IST 646
Compare Gold Loan Interest Rates In India

Almost every household in India buys gold jewellery for various occasions. However, once bought, most of the gold articles sit in storage. Gold loans allow individuals to avail of a loan by pledging the gold articles as collateral.

This type of loan has become a widely popular financial instrument and resulted in numerous financial institutions offering gold loans. Hence, it is critical to perform a gold loan interest rate comparison before choosing an ideal gold loan scheme.

How To Compare Gold Loan Interest Rates?

The gold loan interest rate is one of the most important factors to consider while comparing gold loan schemes. The interest rate determines how much you have to pay as interest on your loan amount. The lower the interest rate, the lower the interest cost and the higher the savings.

However, the interest rate on gold loans is not fixed and may vary from lender to lender and from scheme to scheme. There are various factors that influence the interest rate on gold loans, such as:

Here are the factors that can affect gold loan interest rates:

• Demand And Supply of Gold:

The price of gold in the domestic market depends on the demand and supply of gold. When the demand for gold is high, the price of gold increases. When the supply of gold is high, the price of gold decreases. The interest rate on gold loans is inversely proportional to the price of gold. When the price of gold is high, the interest rate is low. When the price of gold is low, the interest rate is high.

On the other hand, if the supply is higher than the demand, the price of gold decreases. Both situations create a fluctuation in the interest rates of gold loans offered by various institutions.

• The Gold Price:

The domestic gold price is inversely proportional to the interest rates of gold loans. The answer to the gold loan rate today is almost always different as the prices of gold fluctuate daily.

While executing a gold loan interest rate comparison, you should search for the gold loan rate today to ensure that the rate of gold is stable. The higher the gold price, the lower the interest rate, as your pledged gold will be valued higher.

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• Economic Situation:

The economic conditions of the country and the world also affect the price of gold and the interest rate on loan against gold. When the economy is in a recession or facing inflation, investors tend to buy more gold as a safe haven. This increases the demand and price of gold. When the economy is booming or stable, investors tend to sell gold and invest in other assets. This reduces the demand and price of gold.

• Loan Tenure:

The loan tenure is the period for which you take the loan. The loan tenure affects the interest rate on gold loans as it determines the risk and return for the lender. The longer the loan tenure, the lower the interest rate, as the lender has more time to recover the loan amount. The shorter the loan tenure, the higher the interest rate, as the lender has less time to recover the loan amount.

The higher the loan tenure, the lower the interest rates will be, as you will have more time to repay the gold loan. Hence, you must choose a financial institution with more tenure options while taking a gold loan.

• Relationship With The Lender:

If you have an existing relationship with the lender, such as a savings account, a fixed deposit, or another loan, you may get a lower interest rate on your gold loan. This is because the lender already knows your credit history and repayment behaviour and may offer you a preferential rate. However, this is not a guarantee and may vary from lender to lender and case to case.

To compare gold loan interest rates, you can use online tools like gold loan calculators or gold loan comparison websites. These tools help you compare the interest rates, loan amounts, tenures, EMIs, and other charges of different gold loan schemes from various lenders. You can also check the reviews and ratings of the lenders and their customer service.

Interest Rate 11.88% - 27% p.a.
Loan Amount No maximum limit
Loan Tenure 24 months onwards
Processing Fee Rs 0 onwards

Choose the Best Option

To choose the best option for a gold loan, you need to compare the interest rates offered by different lenders and understand the factors that affect them. Some of the factors that you should consider are:

Loan amount: The loan amount depends on the value of your gold and the LTV ratio offered by the lender. You should compare the loan amount offered by different lenders and choose the one that meets your financial needs.

Interest rate: Jewel loan interest rate is the cost of borrowing the loan. It varies from lender to lender and depends on various factors such as the loan tenure, the LTV ratio, the type of interest calculation, and the market conditions. You should compare the interest rates offered by different lenders and choose the one that offers the lowest rate for your preferred loan tenure and LTV ratio.

Processing fee: The processing fee is the charge levied by the lender for processing your loan application. It is usually a percentage of the jewellery loan amount and varies from lender to lender. You should compare the processing fees charged by different lenders and choose the one that charges the lowest fee or waives it off completely.

Foreclosure/prepayment charges: Foreclosure or prepayment charges are the penalties imposed by the lender if you repay the loan before the end of the tenure. Some lenders do not charge any foreclosure or prepayment charges, while some charge a nominal fee. You should compare the foreclosure or prepayment charges levied by different lenders and choose the one that allows you to repay the loan early without any penalty or with a minimal penalty.

Customer service: Customer service is the quality of service provided by the lender to the borrower. It includes aspects such as the ease of application, the speed of loan disbursal, the responsiveness of the customer care, the transparency of the loan terms, and the convenience of the repayment options. You should compare the customer service offered by different lenders and choose the one that provides the best service and support.

So if you are planning to apply gold loan online you should check, the gold loan rate of interest, benefits of gold loan, gold loan repayment terms, gold loan documents requirements, and a gold loan at home is possible.

Avail A Gold Loan From IIFL Finance

With IIFL’s Gold loan, you get industry-best benefits through our process designed to offer instant funds based on the value of your gold within 30 minutes of application. IIFL Finance Gold Loans come with the lowest fee and charges, making it the most affordable loan scheme available. With a transparent fee structure, there are no hidden costs you have to incur after applying for the loan with IIFL Finance.

Conclusion

Gold loans are a smart way to use your idle gold to get instant funds for your needs. However, you should compare the interest rates of different gold loan schemes before applying for one. You should also consider other factors such as loan amount, tenure, charges, and customer service. By doing a gold loan interest rate comparison, you can choose the best option that suits your requirements and budget.

FAQs:

Q.1: What are the documents required?
Ans: Documents required are Aadhar Card, PAN Card, Driving License, Passport, Ration Card, Electricity Bill, etc. Visit the IIFL Finance gold loan documents for more details

Q.2: How much time does it take for the disbursal of the loan?
Ans: With IIFL Finance’s gold loan, you get the loan amount credited directly into your bank account within 30 minutes after the loan approval.

Q.3: What are the MTM charges?
Ans: IIFL Finance levies a flat fee of Rs 500 as MTM charges for valuing the gold articles to reflect their current market value.

Q4: Why Opt for a Gold Loan?

A gold loan is a convenient and quick way to get funds for various purposes such as education, business, medical emergencies, etc. It has several benefits such as:

  • Low interest rates compared to other loans
  • Minimal documentation and verification
  • Flexible repayment options
  • No impact of credit score on eligibility
  • No prepayment penalty
  • High loan-to-value ratio

Q5: Will the interest rate on gold loan vary with the type of gold ornaments I pledge?

Yes, the interest rate on gold loan may vary depending on the purity and weight of the gold ornaments you pledge. Generally, the higher the purity and weight of the gold, the lower the interest rate will be. However, other factors such as loan amount, tenure, and market conditions may also affect the interest rate.

Q6: Will credit score have effect on the interest rate on my gold loan?

No, credit score does not have a direct effect on the interest rate on your gold loan. Unlike other loans, gold loan is a secured loan where your gold ornaments act as collateral. Hence, your credit score does not determine your eligibility or interest rate. However, having a good credit score may help you get better offers and discounts from some lenders.

Q7: Is part-payment of the gold loan option is available?

Yes, part-payment of the gold loan is an option available with most lenders. It means that you can pay more than the minimum amount due on your gold loan at any time during the loan tenure. This can help you reduce the interest burden and the outstanding principal amount. However, you should check the terms and conditions of the lender before opting for part payment. Some lenders may charge a fee or have a limit on the part-payment amount.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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