The present world is going through a wrong phase where the financial world is making a significant difference by putting into the efforts and implementing the required reforms and the policy variation with the minute to minute changes in the market trend of the gold and the gold loan as well. There are other valid opportunities where the departments like that of the loans and advances are helping through the services like that of the gold loan, home loan, car loan, educational loan, fixed deposits that the ordinary people will use in this time of the emergencies. The reliefs in the loan rules and the eligibility are also helping the customers to have access more easily.
Gold loan is the type of loan where the customer is full of tension-free attitude. The reason is that the gold loan that offers many advantages can be counted for a long list. Gold loans are provided with the lowest interest compared to that of the other types of loans. There are many reasons why the interest rates fluctuate are common due to certain factors. There are such factors that will influence the other related benefits of the gold loan as well. The first and foremost thing is the loan amount. When the loan amount is higher, the risk factor will be much more, and thus if the risk factor is more, there will be more interest rate. It is advisable that when the loan amount is relatively low, one should not add multiple targets, increasing the loan amount.
If other requirements are there, then the targets should be planned chronologically, and the loan should be available after the other is over. On the other side of the coin, another more reason will make the rate of interest low in the case of the gold loan. It is seen that where much risk is associated, there is more rate of interest. There is no collateral, or the security is there, then also the speed of the claim is low. Indian bank gold loan have unique additional features like it. The reason is that because the risk associated with the gold loan is negligible. If one the bank or the NBFCs are already having the god with them and if there is the possibility of the bad debt or the lousy loan or the customer have become bankrupt or is announced by the customer that he will be unable to pay, then there will be the freedom from the viewpoint of the banks to resell or make an auction of it and have a collection of the due amount as well.
For example, if we look into the matter, in Indian Overseas bank as of March 2021 up to the loan amount Rs3 lakhs is 7.05 %, and if the loan amount of Rs3 lakhs to Rs5 lakhs is 7.70% and if the loan amount is above Rs5 lakhs, then there will be the rate of interest of 8.15%. All these valuations are done on the basis of the gold loan per gram rate prevailing in the market. Now, if we look into the other third reason, the purity of the gold is the most critical factor.
In different banks, the eligibility is other for the purity of the gold. The gold available in the form of the ornaments and the state of the coins should have a purity range above 18 carats. Anything below 18 carats is not considered to be available for granting the loans. Some gold can have the purity of 20 carats, and on the other side of the coin, few banks will consider 24 carats of gold for granting the loans. In some of the facts, the weight of the gold also felt in the valuing whether the loan is to be given or not for the application of the loan availed. Then the time comes for the income as well. The earning capabilities of an individual are also critical.
Conclusion
If the earning capacity or the monthly earning is less, then there will be a high rate of interest. Still, on the other hand, if the earning power is high, the interest rate will be less as there will be less risk of non-repayment of the future due instalments. To conclude, we can say that the lending rates as of the MCLR and RRLLR rates in the case of the banks and the RBI will also play a very valid impact on the gold loan rates and thus, we can say that the gold loan rates are meager.
Read More:-How To Manage Gold loan
