GoldLoans are a popular form of secured Loans in India. They are provided by
financial institutions and banks, where the borrower offers their gold as
collateral in exchange for funds.
Takinga Loanagainst Gold is a great way to get funds quickly, as itusually has a simple application process and low interest rates. However, the
interest rates on it vary depending on various factors. So, here is a list of
the same for your understanding:
· Loan to Value ratio
Theloan-to-value ratio is the amount a lender is ready to lend against the value
of your gold. LTV ratios typically vary from lender to lender. In most cases, they
range from 60% to 90%. A higher LTVratio implies that the lender is willing to give a higher amount against your
gold. However, a higher LTV ratio may also mean that the Loan against Goldinterest rates and other charges can be higher.
· Gold purity and weight
Thepurity and weight of the gold are important factors in determining the value of
your gold. Most lenders consider 22-karat gold as the standard for Gold Loans.
However, some lenders may also accept 18-karat gold. Moreover, the weight of
the gold is also considered, as it affects the online Gold Loan amountthat can be sanctioned. For instance, the higher the purity and weight of the
gold, the higher the loan amount you should expect to receive.
· Current market value of gold
Thecurrent market value of gold is an important factor in determining the Loan
amount and interest rates. The market value of gold is volatile, and it can
fluctuate rapidly. Lenders consider the current market value of gold at the
time of disbursal of the Loan. In case of any fluctuation in gold prices, the
lender may adjust the Loan amount or interest rates accordingly. To stay
updated on this, it is wise to instal your lender’s Banking appfor the latest information.
· Borrower’s creditworthiness
Thecreditworthiness of the borrower is also an important factor in determining the
interest rates on Gold Loans. Lenders assess the borrower’s credit score and
credit history before approving the loan. A good credit score and history indicate
responsible PersonalBanking habits. They help you negotiate lower interest rates.
Contrastingly,a poor credit score shows irresponsible financial behaviour. Hence, it may
result in higher interest rates.
· Loan tenure
Theloan tenure is the duration for which you take the Loan. In India, gold Loans
typically have a tenure of up to 12 months. However, some lenders also offer
longer repayment periods considering their customers’ convenience. This aspect
affects the interest rates on the Loan. For example, longer Loan tenures may
result in higher interest rates, while shorter tenures may result in lower
interest rates. Therefore, check the tenure and choose one based on your
financial circumstances.
