How to get the best interest rate on your gold loan

By NewsVoir

Gold is valued not only for its beauty but also as a valuable financial resource that can be immensely helpful during emergencies. A gold loan, also known as a loan against gold, allows borrowers to utilise their gold jewellery as collateral to secure funds. When considering a gold loan, one of the critical factors to keep in mind is the interest rate. The interest rate directly affects the loans affordability. As gold jewellery serves as security, the interest rate on gold loans is typically lower compared to other types of loans. With Bajaj Finance, borrowers can access gold loans with interest rates starting at just 9.50% per annum.

Bajaj Finserv Gold Loan

Understanding gold loan interest rates

Gold loan interest rates represent the charges imposed by lenders for borrowing against ones gold assets. These rates play a significant role as they determine the overall cost of the loan. Generally, gold loan interest rates tend to be lower than those linked with unsecured loans. This is due to the fact that the use of gold jewellery as collateral reduces the lenders level of risk.

Tips for securing the best gold borrowing interest rates

Here are five essential tips to help you secure the best gold loan interest rates when applying for a loan against your gold jewellery.

1. Conduct thoroughresearch

Before diving into the gold loan process, it is crucial to research and compare various lenders in the market. Different financial institutions and lenders offer varying gold loan interest rates, so doing your research can save you a substantial amount of money in the long run.

With Bajaj Finance, you can get a gold loan starting from Rs. 5,000 up to Rs. 2 crore at interest rates starting at just 9.50%* per annum. This comes with no hidden charges and convenient repayment options.

2. Understand loan-to-value ratio

One of the most critical factors impacting gold loan interest rates is the loan-to-value (LTV) ratio. This ratio determines how much money you can borrow against the value of your gold. With Bajaj Finance, borrowers can get loans of up to 75% of the golds appraised value, as mandated by RBI regulations.

3. Choose the right repayment plan

The choice of repayment tenure and frequency can significantly influence the interest rate on your gold loan. Opting for a shorter repayment period with more frequent instalments can often lead to a lower interest rate. On the other hand, selecting a longer repayment plan with fewer payment intervals may result in a higher interest rate. With Bajaj Finance, you can choose to repay your interest on a monthly, bi-monthly, quarterly, half-yearly, or annual basis as per your convenience.

4. Monitor gold market prices

Interest rates on gold loans can be affected by external factors unrelated to the loan itself. Keep a close eye on fluctuations in global gold prices, as they can impact interest rates. Generally, when the price of gold rises, interest rates tend to decrease, making loan repayment more manageable. Being aware of these market trends can help you time your gold loan application to secure the best interest rates.

5. Maintain a stable income

Some lenders may request proof of your monthly income during the gold loan application process. Demonstrating a steady income source can work in your favour, as it shows your ability to repay the loan. This can lead to lenders offering you lower interest rates. However, many reputable lenders, like Bajaj Finance, do not require income proof for a gold loan application. In such cases, your KYC documents are sufficient.

Securing the best gold loan interest rates requires careful consideration and research. By understanding the loan-to-value ratio, selecting an appropriate repayment plan, monitoring gold market prices, and maintaining a stable income source, borrowers can increase their chances of securing favourable terms for their loan against gold. Keep these tips in mind to make the most out of your gold assets while securing the funds you need.

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About Bajaj Finance Limited

Bajaj Finance Ltd. (‘BFL’, ‘Bajaj Finance’, or ‘the Company’), a subsidiary of Bajaj Finserv Ltd., is a deposit taking Non-Banking Financial Company (NBFC-D) registered with the Reserve Bank of India (RBI) and is classified as an NBFC-Investment and Credit Company (NBFC-ICC). BFL is engaged in the business of lending and acceptance of deposits. It has a diversified lending portfolio across retail, SMEs, and commercial customers with significant presence in both urban and rural India. It accepts public and corporate deposits and offers a variety of financial services products to its customers. BFL, a thirty-five-year-old enterprise, has now become a leading player in the NBFC sector in India and on a consolidated basis, it has a franchise of 72.98 million customers. BFL has the highest domestic credit rating of AAA/Stable for long-term borrowing, A1+ for short-term borrowing, and CRISIL AAA/Stable & [ICRA]AAA(Stable) for its FD program. It has a long-term issuer credit rating of BB+/Positive and a short-term rating of B by S&P Global ratings.

To know more, visit www.bajajfinserv.in.

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