Gold loans have become an increasingly popular financial tool for many Indians. With gold prices on the rise, more people are leveraging their gold jewellery as collateral to obtain quick cash to meet financial needs. The main appeal of a gold loan is that you can get funds quickly without impacting your credit score. However, with so many financial institutions offering gold loans, how do you find the best deal with the lowest interest rates? This blog post provides a step-by-step guide to help you find the most attractive low-interest gold loan offers.
Tips to Find the Best Low-Interest Gold Loan Offers
Follow these tips to find lenders offering the most competitive low-interest gold loan offers:
Research Online
Check websites of major banks and Non-banking Financial Companies (NBFCs) providing gold loans. Compare their interest rates for various parameters like LTV, tenure, loan amount, etc. Tracking portal and aggregator websites also showcase rates across lenders.
Look for Special Offers
Keep an eye out for promotional and seasonal gold loan discount offers, especially during festival seasons or special occasions. Apply during offer periods.
Opt for a Shorter Tenure
To get the low-interest gold loan offers, opt for shorter, typically 12-month tenure loans, even if your requirement is longer. You can prepay and take a fresh loan at maturity.
Add a Co-applicant
Adding a co-applicant with a healthy credit score reduces risk perception and can get you better interest rates.
Leverage Relationship with the Lender
If you have a longstanding relationship with a financial institution, negotiate to get special loyalty rates.
Evaluate Online Lenders
Many fintech firms offer highly competitive gold loan offers online. Evaluate their offerings and make an informed decision.
Choose Lower Loan-to-Value (LTV) ratio
Opting for a lower LTV ratio, like 70% instead of 75% makes loan providers view you as lower risk.
Other Ways to Reduce Gold Loan Costs
Apart from locking in lower interest rates, here are a few other tips that can help reduce overall gold loan costs:
- Opt for low processing fees options to save up on the total cost of the loan.
- Avoid paying valuation charges. Some financial institutions may provide free valuation.
- Check the prepayment policy, as some loan providers charge high prepayment penalties.
- Opt for minimal or no foreclosure charges whenever possible.
- Don’t take a loan higher than your requirement to end up paying extra interest.
Conclusion
Gold loans can be cost-effective if you get the right deal. By arming yourself with information on prevailing rates, being aware of factors that reduce your interest rates, and negotiating smartly, you can access funds at the lowest possible costs. Periodically evaluating your top gold loan options and switching lenders can also ensure you enjoy the benefits of declining interest rate trends.
