What is the interest on a gold loan?
Posted by KushiBL on March 27th, 2020
Interest is the amount you pay back with the principal amount to the lender after you are advanced with a loan. Borrowers are expected to pay a monthly EMI to include the interest. Apply instant gold loan online.
Given that the gold loan is advanced against security.
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What affects the interest on a gold loan?
Relationship with the bank
They usually advance special offers to their existing clients. When a client has another account with the bank, then they are bound to get a lower interest rate on the gold loan.
Loan to value ratios
The higher the amount of credit compared to the value of the gold then, the higher the interest rate. But when the amount borrowed is lower compared to the value of the gold, then the interest rate is more economical.
The higher the loan amount, the lower the interest rate when all factors remain constant. But smaller loans attract a higher interest rate in a Gold loan.
Features of gold loan Interest
Unlike the interest you pay in other personal loans in India, the gold loan interest is lower, starting at 11.99% p.a.
There are no pre-processing fees for this interest are lower. With a gold loan, you can make a part prepayment and reduce your payment period and, consequently, the interest rate payable.
Different Gold loan schemes,
Gold loans are preferable to most people, because of their ease of application and disbursal. You also do not need a CIBIL history to apply for a gold loan. Therefore the loan can be a choice for many in place of standard personal loans in India. These various loans also service interest depending on the risk evolved.
They are as follows:
Non-agricultural gold loans
This is the loan advanced to all the other individuals who are not farmers.
Agricultural gold loans
The interest in a farming gold loan is given for a maximum loan tenure of 36 months and is charged at an interest rate starting at 11.99%p.a. This is the loan given to farmers and agriculturists and is usually categorized under priority lending. Apart from the gold, the farmers have to show proof of farming.
How does the payment method affect your interest rate?
Unlike any other personal loan, you have varied methods of paying your gold loan. This, in turn, affects the interest you pay.
Bullet payment: They are most popular with short term loans of ^ months and below. They allow for attention to be paid in EMIs and the principal amount at the end of the tenure. However, the loan attracts a lower to value of 65 %, while other loans attract up to 75 %.
The EMI scheme of payment: though it’s not very popular, its increasingly being used by the gold loan applicants. The borrowers are required to pay monthly installments to the lenders. And hence, in the long run, the burden of payment is eased on the borrower.
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About the AuthorKushiBL
Joined: March 24th, 2020
Articles Posted: 17
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