How to Use a Gold Loan EMI Calculator: A Complete Guide

It’s better to calculate your loan EMI before taking a loan so that you can plan your finances better. For instance, you can use a Gold Loan EMI Calculator to calculate your EMI obligations. Adjusting the interest rate, tenure with the help of the calculator would give you a fair idea about how much you have to repay every month. In this article, we will guide you through the steps of using a gold loan EMI calculator so that you can make an informed decision. 

Understanding Gold Loans

Gold loans are secured loans where you pledge your gold as collateral in exchange for funds. These loans are popular because they offer quick access to cash without the need for extensive documentation or high credit scores. Compared to personal loans, gold loan interest rates are lower.

Here’s how gold loans work. You pledge your gold. Based on the gold’s market value, you would receive a certain percentage as a loan amount, which can typically range from 73% to 80%. No income proof required. With Ujjivan, you can get Gold Loans ranging from ₹25,000 to ₹25 lakh based on your loan eligibility and the gold’s market value. The repayment tenure usually ranges from 6 months to 36 months. The gold remains with the bank until the loan is repaid in full.

The Importance of Using a Gold Loan EMI Calculator

When considering a gold loan, it is essential to understand how the EMIs will affect your monthly budget. Using a Gold Loan EMI calculator allows you to determine the exact amount you need to repay each month. This knowledge enables better financial planning and helps you assess your affordability. Here's why using a gold loan calculator is crucial:

• Accurate Estimation: Calculating EMIs manually can be complex and time-consuming. A gold loan EMI calculator simplifies the process by providing accurate interest estimation and EMIs.
• Budget Planning: By knowing the EMI amount in advance, you can plan your budget more effectively, ensuring that you have enough funds to cover your monthly loan payments.
• Comparison of Loan Options: You can compare different loan options based on their interest rates and tenure. This empowers you to choose the most suitable loan for your financial needs.

How Does a Gold Loan EMI Calculator Work? 

Step 1: Find a reliable gold loan calculator

Start by selecting a trusted gold loan EMI calculator from a reputable financial institution or online platform. 

Step 2: Enter the type of ornament, caratage and net weight.

Step 3: The calculator will show you the value of your gold and the eligible loan amount. 

Step 4: Once you calculate the eligible loan amount, you can use an EMI calculator to check your repayment obligations. All you need to do is enter the loan amount, interest rate and tenure. 

Some calculators allow you to also do the reverse. You can enter the loan amount and they would display the amount of gold to be pledged and the monthly interest payable. 

Example:

Let's say Mr. Sharma wants to avail a gold loan of ₹2 lakhs for 1-year. In this case he enters the loan amount into the gold loan calculator and the calculator shows him that he needs to pledge at least 39 grams of gold. Apart from this, the online calculator displays a monthly interest estimation of ₹2750. By using such loan calculation tools you can arrive at interest estimation and hence EMIs. 

Remember, the current Loan to Value Ratio fixed by the RBI is 75%. This means if you are pledging gold worth ₹1 lakh, you are likely to get loan valued at ₹75,000 only. 

Disclaimer: The above example is for illustration purpose only. Ujjivan SFB does not take any responsibility for the accuracy of the information. 

Benefits of Taking Gold Loans

Gold loans offer a range of benefits that make them an attractive financial option for individuals needing quick access to funds. Here are some key advantages of taking a gold loan:

• High Loan Amounts: The loan amount is determined by the value of the gold you pledge.
• Flexible Repayment Options: You can repay the loan in monthly installments (EMIs) or choose bullet payments.
• Competitive Interest Rates: Gold loans generally have lower interest rates compared to unsecured loans like personal loans.
• Quick Disbursement: The loan approval and disbursal process are fast, ensuring immediate access to funds.

No Credit History or Income Proof Required: Approval for gold loans does not heavily depend on the borrower’s credit score or income proof. This makes them accessible to individuals with poor credit histories or those who are self-employed.