Gold loans comprise a significant part of the loans segment in the country. The total value of gold loans sanctioned in the third quarter of 2021-22 stood at Rs. 25,090 crores.
Gold loans are popular mainly because of their low-interest rate.
Every loan comes with an interest rate payable along with the principal amount at the time of repaying the loan.
The interest rate decides the cost of the loan for the borrower and is the most important factor considered by borrowers while choosing a loan.
Therefore, before taking a gold loan, it is important to know the interest rate applicable.
Customers can use the muthoot fincorp gold loan interest rate calculator for this.
How to Calculate Gold Loan Interest Rates
Gold loans are short to medium-term loans where the borrower can pay back the loan in monthly instalments. Customers can use an online gold loan interest rate calculator to calculate the interest rate they would have to pay for the given loan amount. Use the following steps to calculate the interest rate on a gold loan:
- Log on to the website of a reputed lender like Muthoot FinCorp and go to their gold loan interest rate calculator.
- Enter the loan amount or the gold to be pledged as collateral.
- Click on ‘Submit.’
- If the customer enters the loan amount he requires, the calculator will give the amount of gold he needs to pledge for the same.
- If the customer enters the weight of gold he wants to pledge, the calculator gives him the loan amount he can get for the gold.
- The calculator also gives the applicable interest rate, the expected tenure, and the gold loan scheme applicable for this loan.
Customers can find the interest rate, tenure, and gold loan schemes applicable for different loan amounts or the weight of gold they want to pledge.
The calculator uses a 22 karat gold value for the calculation.
The interest rates applied are for a 100% Loan to Value, which means 75% of the value of the pledged gold.
Features of a Gold Loan
Gold loans from reputed lenders like Muthoot FinCorp offer several advantages to the customers.
- The customer does not feel a burden while repaying the loan as he gets flexible options to pay back the loan in the form of EMIs or bullet payments.
- Gold loans are available under different gold loan schemes for customers. These schemes have different interest rates and tenures applicable. It gives several options to the customer while taking a loan.
- The main attraction of a gold loan is its low-interest rates. Gold loans at Muthoot FinCorp start at only 11.99% per annum.
- The loan approval time for gold loans is much lesser than other loans and requires minimum paperwork from the borrower.
- Customers can get a high loan amount, i.e., up to 75% value of the gold, which they pledge as collateral with the lender.
- Gold loans are available for flexible tenures. Muthoot FinCorp does not charge any foreclosure charges on early repayment of the loan after three months of sanctioning the loan.
- The processing of a gold loan is quick and hassle-free.
- Gold loan lenders require minimum documentation from the customers. Muthoot FinCorp asks for the identity and address proof of the customer as documents during the loan process.
- The gold loan processing fee is very nominal. Muthoot FinCorp charges Rs. 20, inclusive of GST, as a gold loan processing fee under certain gold loan schemes.
Factors that affect the Gold Loan Interest Rate
The factors that affect the interest rate on a gold loan are as follows:
- The amount of loan: The loan amount is the primary deciding factor of the interest rate on a gold loan. The higher the loan amount, the higher the interest rate applicable. Customers need to check the loan amount they require before applying for a gold loan and check the various gold loan schemes before choosing the interest rate.
- Gold loan scheme: The different gold loan schemes offered by the lender have different interest rates, loan tenure, and loan amount options. Customers can check out the different schemes and choose the combination that suits their needs the best.
With lenders like Muthoot FinCorp, customers can expect minimum interest rates and high loan-to-value on their pledged gold.
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