The gold loan segment witnessed the highest credit growth of 33.8% in the 12 months up to May 2021. Simultaneously, gold loan outstanding of commercial financial institutions alone grew to Rs. 62,101 crore in the same period. While the growth in the demand for gold loans is encouraging, it also translates to a risk of defaults among lenders. Hence, borrowers should plan their gold loan repayment at the very outset to reduce NPAs in this sector. To simplify this process, selected financiers also extend the gold loan EMI calculator. With this online tool, borrowers can estimate monthly installments and ensure improved debt management.
The process to calculate gold loan EMI using a gold loan calculator
Since gold’s value is subject to changes in the money market, any fluctuation can lead to a change in the gold price. However, the loan’s value depends on the gold rate applicable on the day of availing of this advance. Factoring in the changes in rates while computing EMIs before applying for the loan can be complicated.
In such a scenario, a gold loan EMI calculator helps compute monthly installments without much hassle. You only have to enter these parameters below:
- Interest rates proposed to you.
- Required loan amount.
- Tenor chosen.
On entering these details, the online calculator will compute the results almost instantly. This calculator offers multiple benefits in simplifying the loan application process.
Benefits of gold loan EMI calculator
This online calculator helps in several ways. These are mentioned below:
- This gold loan EMI calculator eliminates any chance of erroneous results and also makes the calculation hassle-free and prompt.
- It considers the current gold value while calculating EMIs.
- This tool is a great way to compare different lenders and find the best gold loan deal online.
Knowing the monthly installments beforehand helps to manage finances better. Nevertheless, this online tool expedites this process and lets you decide how to repay the loan without any hindrance.
Besides the traditional EMI facility, a gold loan also accompanies other borrower-friendly repayment options. These are as follows.
Other gold loan repayment options
A gold loan EMI includes both interest and principal components. However, unlike other debts types, a gold loan offers flexibility in repayment through different options. They are mentioned below:
- Partial payment: In this system, you can repay the interest payable at the very beginning and settle the principal outstanding later, any time before the tenor ends.
- Interest payment: Here, you need to pay the interest periodically. However, you can repay the principal after the tenor’s end. In such cases, you should access online tools like a gold loan interest calculator as well for better debt management.
Consider these options only if you have adequate funds to clear the debt at one go. Otherwise, if you fail to repay the amount, your loan might become an NPA and affect your credit score.
Moreover, while choosing the first option, you cannot access any tool like a gold loan EMI calculator to plan repayment.
Tips to reduce gold loan interest
Besides knowing how to use a gold loan EMI calculator, you should also know the easy ways to reduce the overall interest burden.
1. Meet the eligibility
Fulfilling the gold loan eligibility criteria is simple, as anybody with sufficient gold ornaments can opt for this loan. However, depending on the lender, borrowers can have to meet certain eligibility parameters like
- Age should range from 21 to 70 years.
- Should have a steady income, regardless of profession.
Individuals can secure a competitive interest rate and higher LTV on a gold loan with the right eligibility.
2. Consider the gold purity
The gold loan interest rate also depends on the purity of the gold pledged. For instance, gold jewelry of 22 carats and above is likely to be eligible for better interest rates. With lower interest rates, the total interest outgo will decrease.
3. Part-prepay frequently
Another simple way to reduce the interest outgo of a gold loan is to make part-prepayment as and when possible. Selected financial institutions like Bajaj Finserv allow borrowers to prepay without incurring any additional charges.
4. Compare lenders
Since interest rates vary from one lender to another, you should choose one that offers the most competitive interest rates. It will automatically keep interest outgo under check.
Therefore, besides knowing how to use a gold loan EMI calculator, individuals should also consider other repayment options to settle for one that suits them best.