Gold loans are one of the fastest and simplest ways to get funds against your gold assets. All you need to do is meet the minimal and simple eligibility criteria for such loans and pledge either gold jewellery or coins. Since this loan is secured, you can get a cheap gold loan interest rate which makes repayment of such a loan easier on the pocket as compared to an unsecured loan. However, to find the cheapest gold loan in India, it is best to put in some time for market research. In addition, it is smart to know the factors that affect the gold loan interest rate.
To know more about these factors and how to get the cheapest gold loan interest rate in India read on.
Gold prices in the market
When the price of gold is high in the market, the value of the gold ornaments or coins being pledged by you will also be high. This, in turn, impacts the interest rate offered to you by the lender. Lenders will offer you a lower interest rate in such cases since the risk associated is low. So, to get the cheapest gold loan interest rate, it is best to borrow when gold prices surge.
Inflation rate is a major determinant of interest rates. The higher the inflation rate, the lower will be the gold loan interest rate. This is because the value of currency depreciates due to higher inflation and people tend to accumulate more gold. In a market that is experiencing high-interest rates, you can find a cheap gold loan interest rate with ease. In comparison to other credit options, you can get a lower interest rate on gold loans during such times. The opposite happens when the inflation rate is low, and gold loan interest rates tend to increase. Before you opt for a gold loan, make sure you study the present situation.
Lender type and benchmark
The lender you select for your gold loan also impacts the interest rate you are offered. Usually, banks are known to offer a cheap gold loan interest rate, but NBFCs may give you a higher loan amount upon evaluation of your gold security. So, choose an option that best suits your needs. Moreover, keep the benchmark rates that lenders use in mind as these also affect the interest rate you get. For instance, gold interest rates may be linked to MCLR or repo rates and differ based on which rate the lender follows. These are also impacted by the current interest trends based on demand for gold and demand for credit.
Take a look at the various gold loan interest rates offered by the banks and NBFCs.
1. State Bank of India: 7.50%
2. Bank of India: 7.35%
3. Punjab National Bank: 8.75%
4. Union Bank: 8.20%
5. Axis Bank: 12.50%
6. Canara Bank: 7.65%
7. IIFL Finance: 9.24%
8. Bajaj Finserv: 12.00%
9. Muthoot Finance: 11.90%
10. Manappuram Finance: 12.00%
The amount of loan you desire influences the interest rate offered to you by a lender. This is, in turn, dependent on the purity and weight of the gold you pledge. Usually, the higher the loan amount, the more is the interest rate you will be charged. A smart way to go about getting a cheap gold loan interest rate is to assess your needs and borrow only what you require. This will help make the loan easy for you to repay and get you the best interest rate too.
Income profile and credit score
Even though a gold loan is secured, lenders still check your financial standing, job, and income stability. This helps them assess the risk involved in lending to you and reduce the possibilities of late repayment or default. Your credit score also plays a part here. With a high CIBIL score and good income, you can get a cheap gold loan interest rate. In addition, if you borrow from a lender with who you have a prior relationship, you can further secure a more competitive interest rate.
With a better idea of the factors that affect the rate, you’re in the right position to get the cheapest gold loan interest rate in India. Ensure that you also look out for value-added facilities from lenders to improve your borrowing experience. Consider the Bajaj Finserv Gold Loan, which not only offers up to Rs. 20 lakh but also offers repayment flexibility with various types of options. What’s more, this lender has some of the best safety protocols to protect your asset and accurate evaluation methods too. You also benefit from the part release facility, which allows you to withdraw some of your gold ornaments, whenever the need arises. To get funds instantly, apply online with minimal documentation or visit your nearest Bajaj Finserv branch.
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