Gold Loans at their best interest rate

Gold has an added financial value to it, which allows one to liquidate it and get instant cash with the help of it. We have often heard of cases where entrepreneurs have started their business mortgaging gold. Well, this is a very basic gold loan concept that has been going on for ages. Gold jewelry is presented during marriage ceremonies and not just an ornament, but also an emergency provision. Generally, the rate of interest on gold loans ranges between 9.45% to 11.5%. Although various institutions provide various rates, SBI gold loan providing the lowest gold loan interest rate at 7.50%. Further, there are added benefits to avail of a gold loan in India, but a market survey is an important step that should be followed before applying for the loan.

There are ways by which the borrower can avail of a gold loan at the best and lowest interest rate. Further, these ways are described in details:

• Special offers- Various banks and NBFCs offer interesting gold loan interest rate and discounts, during festive or other special occasions. For this, you need to survey the financial market and gather information over the internet.

• Comparison of different financial systems- Generally, the rate of interest decreases with a higher credit amount. Though, NBFCs offer a higher rate of interest as compared to banks. They provide less credit amount and charge an exorbitant rate of interest during repayment.

• Type of loan- There are various types of gold loans, like an agricultural gold loan, which is credited for agricultural purposes, has a very low rate of interest keeping the poor farmer in mind. On the contrary, if an individual is thinking of getting an overdraft facility on the gold loan then he/she may be required to pay a lot more interest rate.

• Loan to Value (LTV) Ratio- The relation between LTV and rate of interest is directly proportional. This means that the greater the LTV ratio, the higher goes the interest rate. But recently, RBI had announced to provide relief to the borrowers of gold loans, so now banks can lend 90% of the gold value as a loan.

• Existing bank account holder- Bank account holders often get to access a cheaper rate of interest just because they have been holding an account in the same bank. Therefore to get a gold loan approved from the bank where one already holds an FD or a savings account or a loan account is the best option.

Further, when you are going to avail of a gold loan you should be sure regarding the quality of gold. The gold must be hallmarked and government certified. Less pure gold ornaments will get you a lower credit amount. Also, try using larger pieces of assets compared to the smaller ones.

Also read for more: Gold Loan useful for Education purpose