Loans are an easier way to get the necessary financial assistance to meet the needs of a person or a business for a short term or a long term purpose. It is a relatively cheaper mode of getting the necessary finance rather than spending life savings. There are many types of loans that can be availed by the borrowers based on the purpose of loan like personal loan, home loan, car loan, gold loan, etc.
Given below is the meaning of gold loans and gold loan EMI calculator as well as the need for the latter.
What is a gold loan?
Gold loan is one of the oldest forms of loans in the lending markets. To explain it in simplest terms it is the loan given by a bank or an NBFC against the gold owned and deposited by the borrower. The gold deposited is kept safe by the lender and returned in the same form upon the full repayment of the loan.
Gold loans can be used for various purposes like meeting personal expenses, emergencies, for the purpose of the business, etc. The rate of interest on such gold loans is relatively lower as compared to personal loans or business loans and the tenure is flexible ranging from weeks as per the guidelines of the lender.
Also, being secured in nature, these loans can be easily availed based on basic KYC. The repayment schedule in the case of gold loans can also be quite flexible provided the same is as per the agreement between the borrower and the lender.
What is a gold loan EMI calculator?
The gold loan taken by the borrowers has to be repaid in equal installments over the tenure of the loan. These equal installments are known as EMI (Equated Monthly Installments) that are spread over the tenure of the loan and have to be paid at the fixed date per month as per the agreement between the borrower and the lender. The loan EMI is calculated based on three key factors namely, loan amount, tenure of loan, and rate of interest.
The mathematical formula to calculate gold loan EMI is mentioned below.
EMI = P x r x {(1+r)^n/ [(1+r)^n-1]}
In the above formula,
P represents the loan amount given by the lender.
r represents the interest rate charged by the lender for the loan.
For this formula, the rate of interest is considered as a per month rate, therefore, r is calculated as r/12/100.
n represents the period or the tenure of the loan and is shown in the form of the total number of months (for example, tenure of 5 years is represented as 60 months in the above formula).
This formula can be quite complex and difficult to understand for a layman without any financial background or knowledge to calculate and implement this formula. This is where good loan EMI calculators come into the picture.
Gold loan EMI calculator is a tool available on the website of every lender that helps them calculate the amount of EMI payable by them upon taking the gold loan. This tool is quite effective as it reduces the efforts of the borrowers and helps them get a fair idea of the EMI amount to be paid by them per month. This tool requires the borrower to provide the following basic details of the loan into the calculator.
- The amount of loan sanctioned by the lender
- The rate of interest charged by the lender
- The tenure of the loan or the repayment period of the loan.
What are the benefits of using a gold loan EMI calculator?
Gold loan EMI calculator is a very common tool available on lender websites. The benefits of using the gold loan EMI calculator are mentioned below.
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Accuracy of results
Gold loan EMI calculators provide 100% accurate results every time it is used to calculate the EMI for gold loans. Manual calculations can lead to errors and can also be time-consuming. Gold loan EMI calculators can erase the element of human error and give 100% accurate results each time it is used.
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Ease of calculation
Gold loan EMI calculator provides the borrowers with the ease of calculation process. The borrowers do not need to understand the complex mathematical formula to calculate the EMI. It is a simple mathematical tool that can be used by any person at any time by simply visiting the website of the lender or similar customer awareness websites.
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Ease in financial planning
The use of a gold loan EMI calculator allows the borrower to calculate the amount of EMI to be paid each month. This helps them in better financial planning and budgeting by allocating the funds more effectively.
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Multiple calculations
Gold loan EMI calculator can be used multiple times without any restrictions. The borrower can also change any of the parameters to compute an EMI that can be best suited to the borrower’s budget.
How to use the Fisdom gold loan EMI calculator?
The Fisdom website also hosts a gold loan EMI calculator among its various calculators to compute the gold loan EMI. The inputs to be provided for this EMI calculator are,
- Loan amount
- Rate of interest
- Loan repayment period or tenure
Conclusion
Gold loan EMI calculator is a very effective tool that can be used multiple times to get the exact EMI amount that has to be paid by the borrowers to repay their loan. This tool reduces the time and efforts of the borrower and also helps them to calculate the total interest that is to be paid on the gold loan.
FAQs
The standard gold loan tenure can be anywhere between 3 months to 4 or 5 years depending on the guidelines of the lender.
In gold loans, the gold deposited is retained and kept safe by the lender in the same form without any alteration to it and is given back to the borrower after repayment of the loan.
Yes. Gold loan EMI calculator can be used multiple times without any restrictions on the maximum number of times it can be used.
Any resident Indian between the age group of 18 years to 70 years can apply for a gold loan provided the gold is owned by them
There are several reasons which make a gold loan a better option than a personal loan like lower interests rates, flexible repayment schedule, minimal eligibility, and documentation, as well as quick loan disbursement.
