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| March 21, 2024

How Are Gold Loan Eligibility and Amount Calculated?

Considered to be an auspicious metal, gold has always been revered in India. It is not uncommon for people to purchase gold around major festivals or to mark occasions. However, in recent years, gold has been gaining even more popularity as one of the safest investment avenues available for people and as security and a hedge against inflation. Gold also proves to be quite useful in moments when there is a sudden need for funds. Whether it is a medical emergency, for planning a wedding, renovations, debt consolidation, or even for planning a holiday, people can opt for a quick and easy gold loan to take care of immediate expenses. With quick availability, low gold loan interest rates, and easy eligibility, a gold loan can prove to be very advantageous, especially in times of need.

How Does a Gold Loan Work?

Applying for a gold loan is a simple and straightforward process. A gold loan is a secured loan that is disbursed against gold that a borrower pledges as security with the lender. The application process begins with an evaluation of the gold being pledged by the borrower. The value of the gold is calculated based on its purity, weight, and the rate of gold today. Based on the evaluation, the borrower’s gold loan eligibility is calculated, and the loan offer is made. Minimal documentation is required, and funds are disbursed immediately under a gold loan.

Understanding Gold Loan Eligibility

The interest rate for a gold loan is quite competitive and gold loan eligibility is also easy. For availing a gold loan, a borrower should be a citizen of India and should be more than 18 years of age. The credit score and credit history of an individual are not taken into consideration for calculating the maximum amount they can avail under a gold loan. Eligibility is calculated based on the weight and purity of the gold being pledged and the gold rate today. According to RBI, borrowers are allowed to avail up to 90% of the value of the gold being pledged as a gold loan. The price of gold fluctuates daily, so it is important for borrowers to be aware of the gold rate today before they go and apply for a gold loan.

Gold Loan Eligibility Calculator

Before availing a loan against your gold assets, it is a good idea for you to first understand what your financial requirements are, and then get an idea of the available gold loan schemes and applicable rates of interest. A gold loan calculator can then be used to calculate your eligibility. There are two basic ways to use a gold loan eligibility calculator. One is where you enter the amount and purity of the gold that you wish to pledge and some other basic details, and the calculator calculates the approximate value that you will be able to avail as a loan against that gold. The other use of the calculator is where you enter the amount of money that you wish to avail as a gold loan and the calculator will provide you with an estimate of the amount of gold that you will need to pledge in order to be able to avail that amount.

The actual value of the gold, gold loan interest rate, amount eligibility, etc. can only be calculated once a thorough evaluation is performed of the gold being pledged. However, using a gold loan eligibility calculator does help borrowers make informed decisions. It is also important to keep in mind that the estimate provided by the gold loan calculator is based on the data you enter and the standard rate of interest. A gold loan calculator cannot provide an accurate result, as the actual interest rate offered may vary from lender to lender.

Benefits of Using a Gold Loan Calculator

  • Get a Loan Estimate: Gold loan calculators provide instant estimates of the loan amount you may be eligible to get against your gold, which can help you plan your borrowing needs accordingly.
  • Compare Lenders: Different lenders may offer different LTV ratios and different rates of interest. A gold loan calculator can help you compare various lenders, so you can choose a deal that suits your needs and repayment capacity.
  • Informed Decisions: Gold loan calculators help borrowers understand the loan amount they can get, which can help them avoid over-pledging gold assets.
  • Better Financial Planning: Getting an estimate of the loan amount you can get as a gold loan can help you budget your expenses and help you choose a suitable loan tenure.
  • Prepare the Collateral: If you want to avail a gold loan for a particular amount of money, you can use a gold loan calculator to get an idea of how much gold you will need to pledge in order to meet your needs.
  • Choosing a Loan Tenure: Using a gold loan calculator, you can easily experiment with different loan tenure options to see how repayment will affect your finances. This will help you select a tenure that suits your financial situation and goals perfectly.

For those confused about their gold loan eligibility, a gold loan calculator can prove to be quite valuable, as it provides quick loan estimates, supports informed decisions, and helps ensure that borrowers make financially sound decisions. Utilise the Muthoot Gold Loan Calculator today to understand the amount you will be eligible for based on the gold articles you possess.

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