A gold loan is one of the most popular loans available online for people. In this loan, people can borrow any sum of money against the value of gold that they have with themselves. Since this is a secured loan, the rates of interest are reasonable, and the documentation requirements are minimal. That is what makes this loan very popular among people, especially in smaller towns and villages.
When you choose a gold loan, there are a few things to remember:
- The value of the loan depends on the value of gold you submit to the lender. This gold can be jewellery, gold biscuits, gold coins, gold wires etc.
- The gold can be of different purity. It depends on the lender which purity they accept. Some lenders may accept gold of particular purity only.
- The final value of the loan is calculated by multiplying the market value of the gold with the quantity of gold and the loan to value ratio. The loan to value is the percentage of the security that is given out as a loan. This amount differs from lender to lender. Generally, this ratio is between 60% to 85% of the value of the security.
- The gold loan has to be repaid in instalments just like a regular loan. However, this depends on the lender. If the lender is flexible, they may allow repayment of principal at the end of the loan tenure with interest payments monthly or there may not be a fixed repayment schedule to adhere to. However, if the lender has a fixed monthly repayment period, you can use a gold loan EMI calculator to find out the value of the monthly instalment.
To find out the monthly instalment payable under a gold loan, you can use a gold loan interest rate calculator. These calculators are available for free on lender websites that offer gold loans. This calculator is very easy to use. You can find out the monthly instalment using the following steps:
- You need to enter the quantity of gold you will put up as a security. The calculator also asks for the purity of the gold i.e. between 18 to 24 karats. This can help the calculator find out the market value of the security. The value of the loan will be based on the market value of the gold.
- Once the principal amount is decided you need to enter the rate of interest and the loan tenure. The interest rate range and loan tenure range are generally based on what the lender offers and can be customized.
- Once the principal, loan tenure and rate of interest are entered, then the gold loan interest rate calculator displays the monthly instalment amount.
You can use a gold loan EMI calculator to compare the loan offerings by different lenders. These calculators are also a good step to find out the interest rate range and repayment options available by the lender i.e. repayment of interest monthly and principal at the end of the tenure, regular EMI payment etc.