A gold loan comes in handy in times of emergency. Unforeseen circumstances can always occur; at such times, a gold loan becomes your support and helps you deal with such emergencies. A gold loan is the most accessible loan with an affordable interest rate. In a country like India, gold holds excellent value, and it is extremely easy to get a loan amount against your gold.
Therefore, a gold loan is such a loan where you borrow funds against your gold; this gold is kept with the banks/NBFCs as collateral or mortgage. In simple terms, your gold is held as collateral, and you get funds. It is important to note that you do not get the exact evaluated price for your gold. Usually, what you get is 75% of your gold’s value.
For example, your gold is worth Rs. 2 lakhs. You will get funds of no more than 1.5 lakhs. Even for the banks/NBFCs, a gold loan is more secure and safe. Gold is never a non-performing asset and will always be of value in all markets. Therefore, it becomes easy for the banks if the borrower fails to repay the principal amount or misses more than 3 EMIs. They will sell the gold and retract their principal and EMI.
Why Should You Get a Gold Loan?
A gold loan offers excellent benefits and has some excellent features;
- It is quick to avail a gold loan as it’s easy and simple documentation;
- Your gold is held securely by the banks/NBFCs, and there is insurance coverage;
- Quick transfer of funds to your bank account;
- You pay an affordable interest rate
A gold loan is a hassle-free process and helps you in dire times. For instance, you can avail of gold loans for a wedding, education, starting a business and medical emergencies. With minimum documentation and quick disbursal of funds, a gold loan becomes the best option.
Gold Loan Interest Rate Calculator
There is a fixed interest rate on gold loans which can vary from banks to NBFCs. The gold loan rate of interest can quickly help you choose the most effective EMI plan. It can help you forecast your finances well before time, and you can handle your spending accordingly. The gold loan interest rate also varies for agricultural and non-agricultural backgrounds.
Apart from these charges, including the processing fees, GST-Goods and Services Tax is calculated separately per the applicable rates and applied. Hence, you must choose a gold loan from that bank/NBFC, which gives you the best interest rates on your gold loan.
The gold loan interest rate, valuation of your gold and the desired tenure/ the time period that you’re availing the loan for will help you calculate the EMI that you’ll be required to pay on a monthly basis. EMI is an equated monthly instalment and is payable every month to the bank/NBFC or other financial institutions until you repay the entire loan amount and interest.
