A gold loan is a secured mode of finance, where you pledge your gold jewellery to a lender and get a sum of money in exchange.
Unlike unsecured loans, it is not your salary, employment, or credit score that dictates the interest rate you will have to pay. Gold loans are determined on the value of your jewellery, as well as current market prices of gold. Hence, the interest rate charged on this loan tends to be lower than on unsecured loans. Here is a quick look at everything that you need to know about our gold loan interest rate and how you can plan your repayment around it:
Know About Gold Loan Interest Rate
We charge attractive gold loan interest rates starting as low as 0.79% per month, or 9.50% per annum.
Formula for calculating the gold loan interest rate
Your gold loan interest is calculated using a simple formula, as follows:
Let us say you have chosen a loan amount of Rs. 1,20,000 and the interest is levied at 10% per annum, to be repaid monthly. The formula will be:
1,20,000 * 10/100 = 12000 (annual interest amount)
12000/12 = 1000 per month (monthly interest amount to be paid by you for 12 months)
If you wish to avoid manual calculations but still want to know the exact rupee amount your interest rate translates to, you can do so with the help of our handy online gold loan EMI calculator. It will give you not only the interest amount, but also your estimated EMI.
Calculate your Gold Loan EMIs
Repayment schedules for gold loan interest
When you take a Bajaj Finserv Gold Loan, one of the biggest benefits you get is the option to choose between several types of repayment plans. Choose the one that fits your budget the best, based on the amount of interest you have to pay.
The first option is to pay regular EMIs that comprise of both the principal and interest amounts, just like in any other loan.
The second option is to pay the entire gold loan interest at the beginning of the tenure, and pay the principal back at the end.
The third option is to pay just the interest amount at regular intervals. This can be done
- Every month,
- Every two months,
- Every three months,
- Every six months, or
- On an annual basis.
The principal can be repaid when you close the loan.
In addition to the low interest rate on gold loans, we do not levy any pre-payment charges. This means that you can pay back part, or all, of your loan amount before the tenure is up, without incurring any additional cost.
However, do note that you will need to pay the interest amount for the number of days you had the loan. Moreover, if you foreclose your gold loan within the first week of the tenure, you will need to pay minimum 7 days’ interest as a matter of policy.
Factors that affect your gold loan interest rate*
- The loan amount and repayment frequency of your EMIs influences the interest levied on your gold loan. Let us look at these one by one.
- First, the loan amount. Basically, the higher your loan amount, the lower the rate of interest will be. Let us understand this scenario with an example.
- Let us say you choose a loan amount of Rs. 1,20,000, with a monthly repayment plan. In this case, you may be charged interest at 10% per annum. Your interest payouts will then look as follows:
- Rs. 1,20,000 * 10/100 = Rs. 12,000 annual interest
Monthly interest payout - Rs. 12,000/12 = Rs. 1,000 per month
- Now let us see what happens when you choose a higher loan amount of Rs. 5,00,000, at the same monthly repayment frequency. In this case, your interest rate me be lower, at 8% per annum. The total amount of interest you pay will then reduce accordingly.
- Rs. 5,00,000 * 8/100 = Rs. 40,000 annual interest
Monthly interest payout - Rs. 40,000/12 = Rs. 3,333 per month
- Similarly, if you choose a repayment plan with a higher frequency of EMIs, you will be charged a low gold loan interest rate, and vice versa. Therefore, if you take a loan of Rs. 2,00,000 with an annual repayment frequency, then the interest rate charged may be around 12%. However, if you choose to take a loan of Rs. 2,00,000 with a monthly repayment frequency, you will likely be charged a lower interest rate of, say, 9%.
How to get a low interest gold loan with Bajaj Finserv
As you now know, you can easily get a gold loan with us at a nominal interest rate by choosing a high loan amount and a high frequency of repayment.
Simply fill out our online application form with your basic details to set up your appointment at our nearest gold loan branch office. Apply for a gold loan today and benefit from low interest rates, a renewable tenure going up to 12 months, and loan amounts going up to Rs. 2 crore.
*The amounts given in the examples are indicative in nature. The actual charges levied will vary based on the individual application and loan terms.