How is the Interest Rate for a Gold Loan of Rs. 1 Lakh Calculated

How your gold loan amount and interest are worked out

When you apply for a gold loan, understanding how the loan amount and interest are calculated can help you plan your finances better. The loan value is determined mainly by the purity and weight of your gold jewellery, along with the applicable loan-to-value ratio. Bajaj Finance offers gold loans with interest rates ranging from 9.50% to 24% per annum, and loan amounts starting from Rs. 5,000 up to Rs. 2 crore.

If you are checking the 1 lakh gold loan interest rate, it depends on the chosen tenure and repayment option. For example, the gold loan interest for 1 lakh borrowed at an annual rate of ten percent would result in an approximate yearly interest of ten thousand rupees. When spread over monthly repayments, the interest amount becomes more manageable.

To avoid confusion and manual calculations, you can use an online gold loan calculator. It clearly shows the interest payable and helps you understand repayment obligations before taking the loan.

Factors affecting gold loan interest rates

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

The gold loan interest rates 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 Gold Loan Calculator by Bajaj Finance, 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. Since your loan is secured against physical gold, you need not provide any credit score or income proof. Though having a steady income source may lead to a lower interest rate offer, as it indicates your ability to repay the 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.

Before you pledge your gold, know your options. Check your gold loan eligibility and choose the right amount and tenure.