A low-interest gold loan is an excellent alternative for individuals to fulfil their financial needs. Non-banking financial firms and banks need the loan borrowers to submit their gold ornaments as security for taking up a gold loan. Today, the overall demand for gold loans is seeing a drastic increase with gold prices.
This is because when the prices of gold are high, individuals will get a better loan amount for their gold jewelry at amazing jewel loan interest rates. Now, these rates affect the borrower’s repayment amount. Hence, it is crucial to know how interest rates are being analyzed and what else you can do to get a lower gold loan rate while borrowing.
These are some of the ways to improve your chances of getting a low gold loan interest rate:
Whenever you are applying for a gold loan, the firm considers important factors such as your credit score, loan amount, external benchmarks, and monthly income.
- Principal Loan Amount
The overall loan amount you require plays a significant role in determining your interest rates. Also, the overall loan price relies upon the gold value of the ornaments you have provided. The firm usually approves 60% to 90% of the declared value of the gold loan.
Opting for a considerable amount of gold loan means you’ll get a higher interest rate. However, you must always keep in mind that you crosscheck the loan amount and compare all the other available alternatives before selecting the loan interest rates.
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- Your Monthly Income
Most amazing part about taking a gold loan is that the eligibility rules are very smooth as juxtaposed with unsecured loans, like a personal loan. Individuals can easily acquire a gold loan approval from lenders. However, they always consider checking your income source before deciding on a gold loan interest rate. Remember that a stable and higher income directly means that the repayment ability is better, provided that the borrower does not possess any financial restrictions.
Now, the lender is sure that you will repay the loan amount along with the required interest without being late. A low income will affect both the interest rates and the loan amount as it means that the borrower has a limited repayment ability.
- Benchmarking Method
The benchmarking methods usually decide gold loan interest rates. If the interest rates of your gold loan are linked to the Repo link lending rate (RLLR), then a change will reflect on your EMIs every three months. Suppose it’s linked to Marginal Cost of Funds based Lending Rate (MCLR). In that case, the interest rates for your gold loan will have a change every six months or one year as the interest rates for gold loans linked to RLLR or MCLR reflect a difference when the Reserve Bank of India decides to change their repo rate.
Thus, it would help to always ask your loan provider before requesting a gold loan regarding your loan provider’s benchmarking methods. This information will help you better decide on selecting a gold loan according to your preferred interest rates.
- CIBIL Score
Your loan credibility depends on your CIBIL score. You can consider your credit history, and it plays a very important part in deciding the interest rates for any gold loan requirements. All the loan providers consider a healthy CIBIL score a positive sign for repayment for gold loans. As if you have a good credit score, it shows that you don’t miss out on your loan repayments. It assures them that you can repay your gold loan in your decided tenor. So, before you apply for a gold loan, please ensure that you have a good credit score, and if there are any discrepancies, we suggest you rectify them before you apply for a gold loan.
If any individual wants to fulfil their requirements, a gold loan is perfect. You should know how to get a low-interest gold loan in a hassle-free manner. The monthly income, the benchmarking methods and CIBIL play a significant role in determining the gold loan interest rates. The interest rates affect the monthly EMIs. Remember that the lower your interest rate, the lower would be your EMIs. You will have to select the interest rates wisely before applying for a gold loan.