According to the official data from the RBI, the demand for the best gold loan has increased by 82% since last year, and this trend will continue. One of the significant reasons for the increasing demand for gold loans is the gold rate trend. For time immemorial, gold has been considered an important asset, owing to its value appreciation. In India, borrowers leverage their gold’s equity to fund urgent monetary requirements, such as medical expenses, education, business expansion, etc.
In the last few months, price of gold has hit its all-time high, and individuals can now avail substantial funds to meet their financial requirements. Therefore, availing the best gold loan at affordable rates is the best bet to fund big-ticket expenses in the market today.
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Fluctuation of gold rate trends
The price of gold showed a significant fluctuation during the last year. Being a valuable asset for Indian customers and investors, the demand and price of gold have rapidly increased. However, individuals must note that the price of gold will keep fluctuating throughout the year, depending on various factors.
If borrowers go through the gold rate trend in India, it will offer essential insight regarding future fluctuations.
The gold rate relies on various factors, such as stability of the central financial institution, quantitative easing, demand and supply of gold in the market, overall annual production etc.
In the current year, the rate of interest on gold jewellery kept fluctuating throughout February due to multiple factors in the financial market. Last year, the average price of gold in India was Rs.48,651 per 10 grams.
Impact on the demand of gold loan
There has been an acute rise in the demand for gold loans in the pandemic period. As economic dealings and activities reduced, borrowers pledged their gold to avail themselves the best gold loan to meet their essential financial requirements.
Borrowers who are new to the financial market must know that financial lenders reach the standard value of gold by assessing the fluctuations of gold rates over the last one month or by analysing current or ongoing average prices.
One of the essential determinants while opting for a gold loan is loan-to-value ratio. Recently, RBI has increased LTV cap from 75% to 90%, which means borrowers can avail a substantial loan value of up to 90% based on market value of pledged gold ornaments.
Borrowers must know that LTV is directly proportional to the current gold rate in the market. When the rate of gold is on the higher side, borrowing amount also increases. On the contrary, when the price of gold reduces, borrowers need to pledge additional gold ornaments for the same loan amount.
New borrowers must know that with the increase in gold prices, they will get lower loan amounts. Nonetheless, borrowers must check different lenders because the gold loan rate today varies with lenders.
Moreover, gold loan rates are also affected by inflation, unorganised demand, and supply, global movements of gold prices, etc.
Apart from these factors, borrowers must know a few things to avail the best gold loan in the market-
Affordable interest rate
As a secured credit form, gold loans usually come with an affordable interest rate compared to other loans. But interest rates always differ from one lender to another, including associated terms and conditions. Moreover, borrowers have the flexibility to avail of gold loans without even a credit score.
- Flexibility in repayment
Reputed financial institutions like Bajaj Finserv offer flexible repayment options on gold loans. For example, borrowers can choose to pay interest amounts either quarterly or monthly and principal at the tenor’s end. Alternatively, borrowers can pay the entire interest amount at the beginning of the tenor and pay principal later.
- Faster disbursal
One of the major benefits of availing a gold loan is hassle-free and instant loan processing. Moreover, since a gold loan is availed against collateral, lenders extend a substantial loan amount. This is one of the reasons why financial institutions disburse gold loans within a few hours.
Hence, both in the organised and unorganized sectors, gold loan providers are offering digital gold loans, making it one of the perfect reasons for availing the best gold loan.
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