How To Get The Lowest Gold Loan Interest Rate

While seeking a gold loan, a crucial factor is the lowest gold loan interest rate. Gold loans are collateral-backed and less expensive than other types of loans. However, interest rates differ from one vendor to the next in addition to other vital factors that cause an increase or decrease in the rate.
Some lenders may offer a higher or low gold loan interest rate based on the value of your collateral, while others may determine the interest rate based on your credit score and loan term. Therefore, to make an informed decision on your gold loan, it's important to understand the factors that affect its interest rate.

Factors That Affect Gold Loan Interest Rates

Loan Amount

The amount you wish to borrow will influence your gold loan interest rate. Therefore, if you're looking at loan amounts that are either too high or too low, the interest rates will sway without financial rationale.

Loan Duration

Another factor that affects the interest rate is the duration of the loan, also known as the tenure or loan term. Most lenders require borrowers to pay their loans back over a few years. In case there are clauses around an extension of the term or lumpsum pre-payment, the interest rates vary.

Economic Conditions

The final factor that affects gold loan interest rates is economic conditions in general (throughout the country). If there's high unemployment or inflation, the gold loan interest rates will likely rise sharply.

Things To Consider Before Securing A Gold Loan

Research The Lowest Gold Loan Interest Rates In Your Area

To get the gold loan interest rate, perform preliminary research by asking around, online forums, or visiting multiple lenders. When researching interest rates, look at:

• The gold loan interest rate (the annual percentage) charged by different companies
• The interest rate on other types of loans to estimate lenders offering cheaper loans

Beyond the rate of interest, it is further important to consider charges like processing fees, sign up charges, and other vital information. Look for a lender that offers a lower loan processing time, too. Together, these will help you determine the best gold loan provider for you.

Get A Gold Loan Appraisal Done By A Reputable Organization

To get an approval for a gold loan, it’s important to know the weight and purity of your gold. A reputable organization will help you determine these factors through an appraisal. An appraisal is a written document that states the weight, purity and market value of your gold.
The appraisal also verifies that your gold is real and not fake. It gives you an idea about where to sell your jewellery/gold coins if needed as well as what price range (fair market value) for different pieces of jewellery in certain conditions (for example: if it needs cleaning).

Check The Maximum Value You Will Get For Your Loan

Much like any other loan, the lender gives only a portion of the security value as a loan. This is called the ‘Loan to Value’ (LTV). In India, the Reserve Bank of India (RBI) has regulated that the LTV for gold shall be capped at 90%.
This means that if you have gold jewellery worth Rs. 1,00,000, you are eligible to only get Rs. 90,000 as a loan against that collateral. However, the lender may provide a lesser than or equivalent amount of loan.

Check Your Financial Stature

You can get your preferred gold loan if you know the factors that affect it and where to look for it. Your credit score and income level impact the decision, too. If you have an excellent credit score and earn a high income per month, then lenders are more likely to offer low-interest rates on their loans.
Informed with this information, you can now make a better choice in choosing the right partner and getting the lowest gold loan interest rate for your financial needs.

Get The Lowest Gold Loan Interest Rate With IIFL Finance Gold Loans

IIFL Finance has diverse schemes with rates starting as low as 0.83% per month. You can walk into any of our branches pan India, complete e-KYC within 5 minutes and be eligible for getting money within 30 minutes. You can also apply for gold loan through the IIFL app and receive cash for your gold right at your doorstep. Get cash quickly with IIFL Gold Loans now.

Frequently Asked Questions

Q1. What Is The Lowest Gold Loan Interest Rate?

Ans. While the average gold loan rates vary between 7-9 per cent per annum, IIFL Finance provides attractive schemes starting at 0.99% p.m. However, along with interest, your effective rate of borrowing also includes processing fees and other minor charges.

Q2. What Factors Affect Gold Loan Rates?

Ans. The common factors influencing gold loan rates are purity of gold, credit rating, term of borrowing, loan amount, etc. These together determine how cheap or expensive your rate of borrowing would be.

Q3. Will I Receive The Full Value Of My Gold As The Loan Amount?

Ans. You will receive only a portion of the value of your gold as the loan amount. The maximum loan amount is capped at 90% by the RBI but it varies from one lender to the next. IIFL Finance offers 75% of the value of your gold as a loan.