Considering the current economic conditions, it is normal to experience a cash crunch at some point in time. In such cases, secured or unsecured loans are a good way to address your requirement for funds. If you have gold in your possession, you can capitalize on it to meet your short-term financial needs. This type of financing is easy to avail and when you take a loan against gold, interest rate offers are usually a lot more competitive due to their secured nature.
However, to borrow smartly, your goal should be to secure a cheap gold loan interest rate. To know how to optimize borrowing and learn all you need to know about the gold loan interest in India, read on.
The Gold interest rate of popular banks and NBFCs
Take a look at the recent gold interest rate to get an idea of what you may be charged.
| Bank / NBFC | Gold Loan Interest Rate |
| ICICI Bank | 10% to 19.76% |
| Bajaj Finserv | 12% p.a onwards |
| Axis Bank | 13.00% |
| Manappuram Finance | Max 29% |
| Muthoot Finance | 24% to 26% |
Factors affecting gold interest rate
Several factors affect the gold loan interest rate offered to you by a lender.
Market prices of gold
When gold prices are elevated, you do not only get a more competitive gold interest rate but also a higher loan amount as the lender’s risk is lower.
Inflation trends
In the same vein, when there is high inflation, you may secure a lower gold loan interest in India since the price of gold is higher than normal.
Your previous dealings with a lender
While you can get a gold loan from a lender, no matter whether you’re a new or existing customer, having a prior relationship can help you negotiate for a better gold interest rate. This is because the lender already knows your financial profile and repayment ability.
Your ability to repay
While many lenders do not require income proof to approve your application for a gold loan, some do. In such cases, your income can also have an impact on the interest rate offered to you. The more stable your finances are, the lower your gold interest rate will be.
The loan amount you desire
The loan amount sanctioned to you has a direct impact on the gold interest rate you get. The interest rate increases with the amount you borrow and is also impacted by the LTV. If you have a low LTV, the interest rate is lower. Keeping this in mind, borrow judiciously.
Gold interest rate types you can opt for
There are two types of interest rates on gold loans.
– Fixed interest is an interest rate that remains the same for the entire repayment period. Thus, your EMI amount remains the same for the tenor.
– Floating interest is the interest rate that changes according to the market conditions. This may either fluctuate your EMI amounts or increase or decrease your tenor.
The interest rate and other charges
Apart from the gold loan interest rate in India, lenders levy other fees and charges too. These charges include processing fees, valuation fees, documentation fees, part-prepayment or foreclosure charges, penal interest, statement charges, and more. Keeping these in mind, choose your lender carefully to pick one that has affordable fees and is transparent about what you need to pay.
Whether it is a medical emergency or a short-term cash crunch, a gold loan is a quick and easy way to meet your needs. However, to ensure that you get your gold assets back, be sure to plan your repayment well. If you fail to repay your loan, the lender has the right to recover the loan amount by selling off your gold security. Thus, you must choose a lender who gives you a lengthy tenor and repayment flexibility.
If you are looking for a cheap gold loan interest rate and flexible payment options, consider the Bajaj Finserv Gold Loan. It offers a high loan value of up to Rs. 20 lakh at an affordable gold interest rate. Get an accurate evaluation of your gold and enjoy world-class safety protocols to ensure the safety of your gold here. You can also make the most of the flexible repayment options, such as paying interest every month and repaying the principal at the end of the tenor, and the part release facility. You can also part-prepay or foreclose the loan at no extra charges. Apply online now to get the funds you need.
Read also for more finance related topics
