1. Market price of gold
Gold price is one of the most important factors that determines the interest rates on Gold Loans. Typically, banks may offer lower interest rates to attract you if the market price of gold rises. However, when gold prices go down, banks may increase interest rates. This is because banks need to mitigate the risk of taking the pledged gold at a lower value and giving it back at the end of the loan tenure.
2. Inflation
The Gold Loan interest rate is linked to the MCLR rate, which is in turn determined by the Reserve Bank of India’s repo rate. Every time the RBI changes the repo rate, banks’ interest rates also get revised. Therefore, indirectly, Gold Loan interest rates are impacted by inflation.
3. Relationship with the bank
Your relationship with your bank impacts the interest rate on your Gold Loan. For instance, several banks run exclusive offers for their customers. Using these offers, you may get Gold Loans at attractive interest rates or at potentially lower rates than other banks. The relationship could be a Savings Account, Fixed Deposit or a credit product such as an existing loan or a Credit Card.
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Gold Loan repayments can be made in multiple ways. Based on your income, you can select any repayment method, such as regular EMIs or rear-ended payments i.e. payment at the end of the tenure Get a Gold Loan that provides several repayment options, and select the repayment.
