If you are considering a gold loan, it is important to know how the loan amount is determined. Gold loans offer quick access to funds against your gold jewellery pledged as security. Bajaj Finance offers gold loans with interest rates starting from 9.50% p.a., for loan amounts ranging from Rs. 5,000 to Rs. 2 crore.
The loan amount that you can avail of depends on factors like the value of your gold, the loan-to-value ratio, interest rates, and repayment tenure. By understanding these calculations, you can make informed decisions and plan your borrowing needs effectively.
The calculation of your gold loan interest rate follows a simple formula. Let us take an example: If you have chosen a loan amount of Rs. 1,00,000 with an interest rate of 10% per annum, to be repaid monthly. The calculation will be as follows: 1,00,000 * 10 / 100 = 10,000 (annual interest amount) 10,000 / 12 = Rs. 834 per month (monthly interest amount for 12 months)
To make things easier, you can use our online gold loan calculator. It not only provides you with the exact rupee amount of your interest rate, but also estimates your monthly instalments.
Here is a quick look at the factors affecting interest rates and how you can plan your repayment around it:
Loan amount
Obtaining a larger loan is easier when using gold jewellery as collateral due to its high market value. Most lenders will provide up to 75% of the total value of the gold you pledge, which aligns with RBI regulations. Bajaj Finance offers gold loans starting from Rs. 5,000 and going up to Rs. 2 crore against gold jewellery of 18 karat purity.
Market price of gold
Interest rates on gold loans are influenced by external factors such as inflation, global gold prices, and demand-supply dynamics in the jewellery market. Lenders closely monitor these rates as they directly impact the value of the gold collateral. Generally, when the price of gold rises, interest rates tend to decrease, making it more manageable for you to repay your loans. You can also use the Bajaj Finance Gold Loan Calculator which features the changing gold loan per gram rate to assess the maximum loan amount availability as per the weight the of gold jewellery you own.
Monthly income
Gold loans are typically easy to apply for and require minimal paperwork. While some lenders may ask for proof of monthly income, having a steady income source may lead to a lower interest rate offer, as it indicates your ability to repay the loan. However, it is important to note that reputable lenders like Bajaj Finance do not usually require income proof for a gold loan. Just required gold loan documents like - Aadhaar Card, voter ID card, passport, driving licence, etc. are generally sufficient for the loan application.
Repayment frequency
The frequency of your gold loan repayments also affects the amount of interest charged. Opting for a gold loan repayment plan with more frequent payments can result in a lower interest rate, while fewer payments may lead to a higher interest rate. When calculating the interest rate for your gold loan, consider factors such as the loan amount and repayment frequency. You can also use our online gold loan calculator to determine your payable instalments and plan your financial journey more effectively.
Bajaj Finance offers you the additional benefit of choosing from multiple repayment options. You can choose to pay the entire gold loan interest at the beginning of the tenure and pay the principal back at the end. You can also choose to pay the interest monthly, bi-monthly, quarterly, half-yearly, or annually as per your convenience.
