A Quick Guide to Know About Gold Loan Interest

Gold is an essential pointer of the current economic state. Gold accounts for around 1% of global funds, it might seem to be a small percentage but still holds hundreds of billions of dollars in investment. Gold is an excellent hedge against inflation and investments in gold always prove to be a savior in difficult situations.

Gold will never become worthless, and its price will keep rising with its demand.

So, if you have invested in gold and want to avail some amount by applying for a gold loan, you should know about gold loan interest rates and how to calculate gold loan interest rates. Availing, gold loan is the simplest way to get financial support for a short period.

At the end of the article, you'll be able to learn how to calculate gold loan interest rates and important things to keep in mind.

Why opt for a gold loan?

A gold loan is one of the simple options to fulfill short-term financial requirements. One should opt for a gold loan because

No complex documentation is required when compared to other loans, with a hassle-free process.

The repayment of gold loans is flexible. You can repay from some days to several months

No proof of income or credit score is required as it is a secured loan. Thus, people with no fixed income can manage to get this loan.

Many banks don't charge for prepayment on a gold loan

The processing of a gold loan is fast with minimal documentation.

The interest rate of the gold loan is lower as compared to unsecured options like a personal loan.

Interest rate

Interest is the amount the bank charges a borrower, and it is the percentage of the principal amount availed. A loan consists of two components, which are principle and interest. Similarly, a gold loan is known to be repaid when the principal amount and interest have been paid off.

Thus, before applying for a gold loan you must research and opt for a lender which provides gold loans at lower interest rates. It is important because you would not want to pay a surplus amount.

How to evaluate gold loan interest?

Before calculating the interest, you should know that the amount of loan offered is only 75% of the value of your asset provided as collateral.

To calculate gold loan use the formula below

E = P x r x (1+r) n / [(1+r) n-1)]

Here E = Equal monthly installments

P = Amount you want to avail (principle amount)

r = Rate of interest

and n = period of loan (in months)

Calculation of a gold loan will help you in planning your future funds. Gold loans are one of the quickest ways of availing funds using your gold assets. It has a simple process, with fewer interest rates and processing fees. Therefore it is a must to calculate the gold loan interest.

Requirement for gold loan

The loan amount you want to avail is only to be sanctioned based on the purity of your gold and the current gold price. If the purity is high, the loan amount will be higher. Most of the banks have their gold valuers who check your asset and give the estimate in writing.

Documents

Now you know how to calculate the gold loan interest.

Apart from this, one must also be ready with the documents below for a gold loan application:

Your bank statements for the last 12 months

Proof of assets you pledged like gold ornaments, jewelry, or coins

Two passport-sized photographs for the application form

KYC documents issued by the government.

any other document asked by the lender

Conclusion

A gold loan is a quick and simple way to avail of a loan for a short tenure. Being a secured loan, gold loan rates are lower than others. Your gold is kept safe in the bank till the end of the tenure and once you repay the full amount with gold loan interest, it is returned to you. Before applying for a loan, you should calculate the gold loan interest rate to prevent ending up paying a surplus amount. The formula to calculate the gold loan interest rate is E = P x r x (1+r) n / [(1+r) n-1)]. Before applying for a gold loan, know your requirement and go for the lower interest rate.

Gold loan companies such as Rupeek is one of the secure platforms to get your loan done at a low-interest rate. They provide the best customer service which makes them one of the most trusted and adaptable companies in India. You can get the gold loan in just 24 hours by proceeding with your documents immediately. They also offer suitable gold loans at low interest based on your choices and requirements.