Gold Loan Interest Rate

Prior to applying for any type of loan, it is crucial to check the interest rate charged on these. Gold Loans fall under the secured category and thus help you enjoy lower interest rates, compared to other unsecured loans. The lender decides the interest rate charged based on factors like the quantity, purity, and weight of the gold you look to submit as collateral. It also takes the current value of gold and the prevalent inflation rate into consideration. On Bajaj Markets, you can get a gold loan at interest rates starting as low as 8.88% p.a.

*Disclaimer: The rates are subject to change at the lender’s discretion.

Here are some reasons why getting a gold loan may be beneficial to you:

• You can borrow higher amounts due to the high market value of gold, based on which the loan terms are determined

• Loans are available at lower interest rates because of the gold submitted as collateral, which offsets the lending risk

• Besides gold jewellery, no additional security or collateral is required

• The funds can be utilised for various purposes, unlike specific loans such as car or home loans

• Gold loan has minimal documentation requirements 

• A strong credit history is not mandatory to get a loan. However, it can help you get better loan terms.

Some things which may have a major effect on your gold loan interest rate are as follows:

1. Loan Amount

The higher the loan amount,  the more the risk for the lender. To mitigate this risk, the loan provider may charge a higher interest rate. Thus, it is essential to borrow only what you need to get as low an interest rate as possible.

2. Gold Rates

As the price of gold fluctuates, the interest rate and loan-to-value (LTV) ratio of your gold loan are affected. The interest rate increases when there is a surge in the gold rates and vice versa. So, monitor these rates carefully and strategically apply for the loan at a time when the rates are favourable.

3. Income & Employment

Having a stable job and income ensures the lender of your loan repayment ability. Having a minimum work experience of 3 to 5 years and a high income can improve your eligibility. This can help you get the loan at low interest rates and flexible repayment options.

4. Type of Interest Rate

Depending on whether you opt for a fixed or floating interest rate, the total interest charge of your loan may differ. In the case of a fixed rate, the interest charged is the same over the loan tenure which provides predictability and easier loan management. However, you can save on the interest costs with the floating rate, which is initially lower than a fixed interest rate. As the market rates fluctuate, the floating rate is revised. Sometimes, in case of inflation, recession, etc. the rate may increase drastically and surpass the fixed rate. So, it is important to constantly monitor the rates and market trends when choosing a floating rate.