Reputed financial institutions in India offer gold loans for farmers to aid in a variety of agricultural and related operations. These operations include buying irrigation equipment or machinery, purchasing raw materials, cultivating crops, increasing inventory or stock, and much more.
Interest rates, eligibility requirements, payback terms, and fees and charges for agriculture gold loans vary from bank to bank. Continue reading to learn more about this credit facility and how you can get the best interest rate for an agriculture loan.
How to get the lowest interest rates on agriculture gold loans?
Prospective borrowers can follow these tips to get the lowest jewel loan interest rate:
- Comparing interest rates
Comparing multiple lenders is one of the simplest ways to find the lowest rates of interest available. People can also utilise a gold loan calculator for added ease. It assists people in calculating the overall interest payable for a specific tenure and loan amount.
Here are the steps that one can follow to use an online gold loan calculator:
Step 1: Visit the official website of a reputed financial institution
Step 2: Locate the gold loan calculator option
Step 3: Enter the gold loan amount, tenure and the interest rate as charged by the lender
Step 4: Alternatively, applicants can also enter the details of the gold jewellery, interest rate and tenure
Step 5: Finally, click on the “Calculate” button
This online tool will display the accurate result within seconds. Further, individuals can change the interest rates as many times as they want and settle down for a lender that offers the most feasible deals.
- Pledging gold ornaments of high-purity
The interest rate on gold is also based on the purity of the metal. Lenders accept gold articles that have a purity of 22 karat or more. However, 24K gold items receive the lowest gold loan interest rate from lenders. This is because gold with higher carat measures has a higher market value.
Further, it is important to note that one cannot keep gold bars and coins as collateral. To be eligible for the lowest rate of interest, people who apply for a gold loan for farmers must pledge genuine gold jewellery that is free of other metals.
- Meeting all eligibility parameters
You must satisfy specific eligibility requirements in order to apply for a gold loan, whether it be offline or online. Knowing lender-specific qualifying requirements can help you receive the best rates because the criteria for gold loans differ among lenders.
The essential requirements for this credit are as follows:
- Applicants must be a citizen of India
- They should be between 21 and 70 years old
- Applicants can be salaried employees, independent contractors, farmers, traders, and others.
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However, unlike other loans, this credit instrument gives minimum importance to credit scores.
- Providing all necessary paperwork
In addition to being eligible, applicants must also present a number of supporting documents, including proof of identity, proof of address, and proof of income. One can get the best interest rates on a gold loan by producing the necessary documents as and when asked by the lender.
- Listing all sources of income
Only after considering the applicants’ ability to repay, do lenders determine the interest rates for gold loans. Thus, a person’s monthly income is quite important. Since anyone can apply for this credit, regardless of their job status by providing proof of a reliable monthly income.
- Checking the current market price of gold
The interest rate on a gold loan and price of gold are both influenced by different macroeconomic factors. When the price of gold is high, people may typically get loans for bigger amounts. Due to the high value of collateral (gold) and decreased loan risk during this time, financial institutions also charge lower jewel loan interest rates.
- Assessing the inflation rate
Similar connections exist between inflation and interest rates on gold loans. In an economy with significant inflation, the cost of goods and services, including gold, increases. Because of the high price of gold at that time, lenders provide low interest rates if one takes out a loan against it.
Regardless of the interest rates, people should think about their ability to repay the credit before applying.
Therefore, people who want to opt for a gold loan for farmers can use the aforementioned tips and increase their chances of getting the best interest rates on gold loans.
