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.
