A gold loan is a secured loan where gold ornaments are used as collateral to obtain a loan. The loan amount is determined by the value of the gold pledged. The gold loan rate per gram is one of the key factors influencing the interest rate on gold loans. Other important factors include gold purity, your loan amount and loan tenure. Some of these are within the borrower’s control, while others are not.
Let’s take a look at some of the key things that can influence the interest rate:
1. The purity of the gold:
The higher the gold’s purity, the lower the interest rate will be. It is because the bank or NBFC can easily sell the gold in the open market at a higher price; hence, they are willing to lend at a lower interest rate.
2. The tenure of the loan:
The longer the tenure of the loan, the higher will be the interest rate. It is because the lender will have to bear the opportunity cost of not being able to invest the money in some other lucrative avenue.
3. The borrower’s credit score:
A good credit score means that the borrower is a low-risk customer, and hence, the lender is willing to offer a lower interest rate.
4. The current market rate of gold:
If the market price of gold is high, the interest rate on the gold loan will also be high. It is because the lender will want to protect himself from the risk of price fluctuation.
5. The margin money:
The higher the margin money, the lower will be the interest rate. It is because the lender’s risk is reduced as he has more security in the form of gold.
6. The location of the borrower:
The interest rate on the gold loan is usually higher in rural areas compared to urban areas. It is because the lending institutions perceive more risk in lending to borrowers in remote areas.
How to get an online gold loan?
To get an online gold loan, you will need to provide basic information, such as your name, address, phone number, email address, and the amount of money you would like to borrow. You will also need to upload photos of your gold jewellery or coins. Once you have submitted your application, you will usually receive a decision within 24 hours.
You will be required to sign a loan agreement if approved for a gold loan. This agreement will outline the terms of your loan, including the interest rate, repayment schedule, and other important details. Be sure to read over the loan agreement carefully before you sign it. Once you have signed the loan agreement, you will be required to make regular payments on your loan.
If you cannot make your payments on time, you may be subject to late fees or other penalties. Therefore, it is important to make sure you can afford your loan’s monthly payments before you apply.
As we have seen different factors that affect the interest rate of gold loans, we understood how to get a low-interest rate. Among all these factors, the main factor is the gold loan rate per gram. To get an online gold loan, follow the steps listed above. Online gold loan is convenient because it has many benefits, such as getting a gold loan from the comfort of your home without having to visit a bank or lending institution.
The process is completely paperless, and you can get the loan amount credited to your account within 24 hours. Gold loans are usually cheaper than personal loans and credit cards, making them a more affordable option for borrowers.
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