When it comes to financing options, a gold loan can be a reliable and convenient choice, especially in India, where most households hold a certain amount of gold. And when considering gold loans not requiring a high credit score, it makes the most sense. Using gold as collateral, you can secure a gold loan for several reasons, from a medical emergency to paying for your child’s college.
Using a gold loan calculator to simulate different terms, interest rates, and loan-to-market value, you can secure a loan with attractive interest rates and flexible repayment options. Let us explore how to use a loan calculator to get the best deal possible for your gold.
What is a gold loan?
Before we get into the tips and tricks, let us first understand what a gold loan is and how to get one.
A gold loan is a form of a secured loan that can be acquired by pledging gold and gold jewelry from 18 to 24 carats as collateral. The sum or loan-to-market ratio for this gold is usually up to 80% of the market value of gold and quality.
Gold loans can be approved even with low credit scores or no credit history and come at a lower interest rate than other unsecured loans.
How to get a gold loan?
It is effortless to get a gold loan in today’s date. All you need to do is to download the applications of reliable gold loan providers like Bajaj Finserv, Muthoot Finance, and IIFL and go to their gold loan section.
Once there, just fill in the application form and provide your location. Afterward, you will be given an appointment at the lender’s nearest branch to get your gold inspected and appraised and, once you agree to the loan terms, a quick disbursal of the amount in your account.
Why use a loan calculator?
While trying to get a gold loan, apply online and use a loan calculator to help you estimate the loan amount and the corresponding interest rate based on the value and purity of the gold you wish to pledge. Enter the quality, the quantity of the gold, and the loan tenure. By doing this, you will be showcased the loan amount based on the interest rate, current market value, and term.
This ratio determines the loan amount you can obtain against the value of your gold, different lenders have different percentages, but it is usually under 80% of the current market value. You should use a calculator to see which lender provides you with a bigger loan to market value based on your gold but don’t get dragged into having to pay a higher interest rate.
Interest rates play a significant role in determining the overall cost of your gold loan. When using a loan calculator, evaluate different gold loan interest rates offered. Some lenders may offer fixed interest rates, while others may provide a floating interest rate that varies with market conditions.
Apart from the interest rate, lenders may levy additional charges such as processing fees, valuation charges, and late payment penalties. So you must check and assess these charges before accepting the loan.
Thus, using a loan calculator effectively can help you secure the best deal for your gold loan by helping you evaluate different lenders, consider the loan-to-market value, compare interest rate options, and check for additional charges. By following these tips and tricks, you can maximize the benefits of a gold loan.
This is why I used Bajaj Finserv’s gold loan app and its loan calculator to get the best value on my gold while trying to renovate my house.