Thursday, July 2, 2020
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How Does the Gold Loan Calculator Work?

Gold has been playing an important part in the Indian economy for a long time. It is imbibed in our history as well as culture. However, today, gold has many other uses that most are ignorant about. Do you know that your gold can help you during a financial crisis in your life or business? So, let us learn how you can make use of your gold for a gold loan and calculate monthly EMIs using a gold loan calculator.

How do Gold Loans Work?

Gold loans are great ways to use your gold stock to arrange necessary funds for your immediate financial needs. There are standardized rates depending on various factors that will determine the total loan you can ask for and the interest that you need to pay on return. The gold is kept as a security deposit in case of payment default or failure. Thus, it acts as the collateral for the loan.

You gold is often secured in vaults and is insured for the time period of the loan so that you can have your peace of mind. Our gold security standards are state-of-the-art with check-in parameters and other essentials. Gold loans are generally short term loans ranging from a few months to a year depending on the amount of loan drawn against the gold. It can vary depending on international price variations and market fluctuations, so it is recommended that you contact us to understand the current rates and parameters.

Understanding The Gold loan Calculator

Now, the value of a gold loan is determined based on a number of factors. The bank will determine these factors to calculate the amount that you are eligible to draw, called loan to value ratio. Let us understand these factors in order to determine the variables that will help you to have better chances at securing a gold loan:

  • Purity and Net Weight: Banks have to determine the purity and net weight of the gold that you have submitted as your collateral. The basic measuring standard is between 18 to 24 carats. Also, the bank will not take the weight of the gems and stones into consideration while calculating this.
  • Current Market Price: Once the banks have successfully determined the purity and net weight of the pledged gold, they will multiply it with the current market value of gold. You can keep a check on standard gold rates and current gold rates from the internet. As per the instructions of RBI, banks have to adjust the past 30 days average price of 22 carats gold with the net purity amount.
  • Loan to Value Ratio (LTV): Once the value of the above parameters is determined, the banks will implement a standard rate of up to 75% of LTV to determine your gold loan eligibility. If the loan amount that you plan to take is lower than the maximum LTV, then the bank may offer you lower interests as well.

The EMI that you need to pay against the loan is then determined based on the LTV and the amount that you have drawn. You can find out the exact amount of interest by deducting the principal value from the total amount that you need to repay.

Final Word

Under current market scenarios, gold can be used as an essential asset that can help you get much-needed funds for personal or business expenses. They are in safe and secured hands, and you can get the exact amount back after the successful repayment of the loan that you have drawn.

With the help of the gold loan EMI calculator offered by us, you get to determine the exact value of your pledged gold and how much you can draw against the same. You need to also keep in mind that gold has a huge emotional value in a country like India and is mostly considered as a family heritage rather than financial assets. Therefore, you always have the risk of losing your pledged gold if you fail to repay the amount. Therefore, ensure that you have a good track record of loan repayments and ensure that you can repay the loan in time to avoid penalties.

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