The below article is authored by Priyank Kothari, Director of Arvog
Gold has emerged as the most appropriate asset for borrowing, thanks to its rising prices, which enhance loan value too. Gold loans offer one of the quickest and most convenient financing options in times of need. If you are considering taking out a gold loan, you might be wondering how to get the lowest interest rate possible. Here are some tips for getting the best deal on Gold Loan.
Since ages, gold has been a treasured asset, admired for its beauty, durability, and inherent value. Historically, it has served as a reliable store of wealth and a form of currency. In recent years, with rising gold prices, it has also gained prominence as a valuable asset for securing loans, where gold is used as collateral.
However, interest rates for gold loans can vary significantly. To secure the most favourable deal, here are some key tips to consider:
Compare Rates from Multiple Lenders to get best deal on Gold Loan
Take the time to shop around before finalizing a lender. Comparing offers from various lenders is the best way to secure the lowest gold loan interest rate. Begin with online research to identify potential lenders, then visit them in person for detailed discussions. Ensure you gather complete information, including processing fees, appraisal fees, and early repayment penalties, as these additional costs can affect the overall expense of the loan.
Negotiate for Better Rates
Once you’ve received quotes from multiple lenders, start negotiating. Lenders may be open to offering lower rates to secure your business, especially if you have a strong repayment history and a good credit score. Since gold loans are secured loans, highlight your creditworthiness by presenting your credit history, income, or other assets. Use competitive offers as leverage to negotiate a better rate.
Loan Amount
The loan amount plays a crucial role in determining the interest rate. Typically, higher loan amounts attract higher interest rates due to the increased risk for the lender, while smaller loans often come with lower rates. Choose your loan amount wisely to manage costs effectively.
Loan Duration
The tenure of the loan is another significant factor. Short-term gold loans often have higher interest rates compared to long-term loans. Assess your repayment capability to decide the ideal tenure that balances affordability with convenience.
Loan-to-Value (LTV) Ratio
The LTV ratio refers to the percentage of the gold’s market value that a lender is willing to provide as a loan. While the Reserve Bank of India (RBI) regulates LTV limits, different lenders may offer varying LTV ratios. Higher LTV ratios typically result in higher interest rates, so it’s important to assess how much you need to borrow and its impact on the cost.
Additional Tips for Borrowers to get Tips to get the best deal on Gold Loan
- Maintain a Strong Credit Score: Even though gold loans are secured, a good credit score can improve your negotiation power and help you secure better terms.
- Research the Lender’s Background: Verify the lender’s business legacy, reputation, and credit ratings to ensure you’re dealing with a credible institution.
- Review the Key Facts Statement: Before signing the loan agreement, thoroughly review all terms and conditions to avoid hidden charges or surprises later.
By taking these steps, you can make informed decisions and maximize the benefits of your gold loan while keeping costs under control.
Arvog is a new-age, AI/ML-powered, customer-centric finance company that makes digital lending quick, efficient, and easy. We see worth in in lending wings to people’s aspirations, hopes and dreams. We believe purpose-driven credit can be a true-life enabler. Arvog is here to lend a helping hand, with affordable loans designed specifically for those who need them the most.
