Many Indians turn to the gold loan when they are in need of emergency funds. Until the loan is fully repaid, the gold acts as collateral with the bank. A person can depend on a gold Loan at any moment, whether they need money to grow their business, pay for school expenses, cover a medical emergency, or meet agricultural demands
What is a gold loan?
According to the ICICI Bank website, “A Gold loan or loan against gold is a secured credit facility extended by banks and financial institutions, letting you pledge your gold jewellery or ornaments in exchange for funds.”
Interest rates on gold loan vary with each bank. Also, one should also consider other aspects such as processing charges, foreclosure rules, etc., before choosing the bank
Here are 10 banks offering the best interest rate on gold loans.
Dos & Don'ts While Opting for Gold Loan
According to the Bank of Baroda website, here are important Dos and Don’ts to consider while opting for gold loan.
What to do:
Check your gold's purity:
Lenders accept gold of a minimum of 18 carats. While lenders take the necessary measures to ascertain the gold's purity, it helps if you check the same before approaching the lender.
Check lender credibility:
With Gold Loans, you must entrust the gold purchased with your hard-earned money to a stranger. Therefore, you must assess the lender's credibility before pledging your assets.
What not to Do:
Neglecting the LTV factor:
The RBI has capped the LTV ratio at 75%. Do not expect the lender to offer more funds than the LTV, as it can lead to loan rejection.
Delaying repayments:
Delay or non-repayment of your Gold Loan results in you losing your gold. It also reduces your credit score significantly.
If you don’t repay gold loan
Gold Loans have a number of advantages, and applying for one is simple, but you must make sure you pay it back completely and on time. If you fail to repay loan even after several reminders, the lender will have to sell your gold at an auction in an effort to recoup or balance the losses sustained from the loan. Usually two weeks before the auction, lenders will let you know about it auction two weeks prior to the auction date.
FAQs
Loan Amount
- HDFC Bank. 7.60% to 17.05% p.a. ...
- Kotak Mahindra Bank. 8.00% to 17.00% p.a. ...
- Central Bank of India. 8.10% to 8.20% p.a. ...
- Indian Bank. Around 7.00% ...
- ICICI Bank. 8.99% to 17.99% p.a. ...
- Axis Bank. 11.99% p.a. onwards. ...
- Canara Bank. 9.60% p.a. Rs.5,000 to Rs.35 lakh.
- Bank of Baroda. 9.15% p.a. onwards. Up to Rs.50 lakh.
Compare Gold Loan by Top Banks in India
| Gold Loan Providers | Interest Rate | Tenure |
|---|
| SBI Gold Loan | 8.70% p.a. - 8.70% p.a. | Up to 36 months |
| HDFC Gold Loan | 11% p.a. to 16% p.a. | 3 months to 24 months |
| Muthoot Gold Loan | 10.5% p.a. onwards to 22% p.a. | 12 months onwards |
| Axis Gold Loan | 17% p.a. onwards | 6 months to 36 months |
12 more rowsGold Loan Interest Rates
You can avail Gold loans from Federal Bank at interest rates as low as 8.99% onwards.
Which loan is better, a gold or a personal loan? ›
A gold loan is secured by gold collateral, offering lower interest rates but risking asset loss. Personal loans, unsecured, have higher rates but no collateral risk. Evaluate your financial situation, urgency, and risk tolerance before deciding.
Should I take a loan to buy gold? ›
Some people use a personal loan to invest in gold and silver because when interest rates are low, and the price of gold and silver is rising, the metal prices could increase at a higher rate than what you'll pay in interest on your loans. This is an unwise investment strategy for many people.
Can banks give interest on gold? ›
Yes, the Principal is denominated in Gold (Grams) and Interest is denominated in INR. The Interest is paid in INR upon Maturity.
What are the disadvantages of gold loan? ›
1. Risk of Asset Loss: Defaulting on repayment could lead to losing valuable gold assets. 2. Limited Loan Amount: The loan amount is often restricted to a percentage of the gold's value.
What is the gold loan interest rate? ›
Types of fee. Applicable charges. Interest rate. 9.50% to 28% per annum. Processing fees.
Which loan has the lowest interest rate? ›
Secured loans typically offer some of the lowest interest rates due to the collateral provided by the property. The loan is secured by the home, gold, or any vehicle, which reduces the risk for the lender.
What is the processing charge of federal bank gold loan? ›
Processing fees range from Rs 250 to Rs 1500. PF/Admin Fee: 100 to 1,300 rupees.
Gold Loans come with relatively shorter repayment tenures as compared to most other loans. Typically Gold Loan maximum tenure for repayment is 24 months in case of long-term loans repaid in EMIs, and six months in case of short-term loans repaid in a lump sum.
Does gold track interest rates? ›
Gold and interest rates traditionally have a negative correlation in the relationship between the two. It is not guaranteed but usually the gold price goes up when interest rates go down, and down when rates go up.
Does gold loan affect credit score? ›
All in all, a Gold Loan can have a substantial effect on your credit scores. Firstly you must apply for loans in a timely fashion and avoid borrowing too heavily. Secondly, you must ensure that you repay loans on time to improve your credit score.
Is it better to go through a bank or lender for personal loan? ›
Higher interest rates and fees: Banks tend to charge higher interest rates and more fees compared to their credit union and online lender counterparts. 12 If you don't qualify for a discount rate, you might end up paying more through a bank than you would with another lender.
Is it better to take a loan from a private bank? ›
The best option for you depends on your specific circ*mstances. If you lack credit history or have poor credit it may be easier to get a loan from a private lender. If you have a good credit score or an established relationship with a bank, you will likely qualify for better lending terms.
How do you keep gold in bank for interest? ›
- Opportunity to earn interest on the idle gold lying in your locker/ house/ trust.
- Save on locker charges presently used for storing gold.
- Gold accepted can be in the form of bars, coins and jewellery.
- Tie-up with renowned refiner - Check your gold's purity as well as assess the gold in your presence at the CPTC Centre.
Lowest interest rates charges by banks on their personal loans:
| Bank | Minimum interest rate on personal loan (%) |
|---|
| HDFC Bank | 10.5 |
| State Bank of India | 12.30 |
| Bank of Baroda | 13.15 |
| Punjab National Bank | 13.75 |
6 more rowsJan 24, 2024
The YES BANK Gold Loan arrives at an interest rate ranging from 9.65% to 15.65% p.a.and it will rely on different factors like the overall profile & loan amount. Also, you will get a tenure of up to 36 months (3 years). Check out the highlights of Yes Bank gold loan.
