Gold loans are one of the most popular financing options in our country due to the high availability of household gold, lower interest rates than unsecured loans such as personal loans, quick and hassle-free disbursal, and less reliance on the borrower's credit score.
If you're considering a gold loan for non-agricultural purposes, you should make your decision within the next few days. The Reserve Bank of India announced in August last year that the maximum loan to value (LTV) ratio for gold loans would be increased from 75 per cent to 90 per cent to help borrowers secure an enormous loan amount on the same amount of pledged gold to support the ordinary people's financing needs during the Covid-19 crisis. However, that relaxation is only in effect until March 31, 2021, so you don't have much time to take advantage of it, the gold rate today has declined.
To avoid additional penalties and the potential loss of a valuable asset, ensure the loan amount sanctioned is sufficient to meet your financing requirements, compare your options across various lenders to find a deal with the best repayment terms, and have a detailed repayment plan before applying for a gold loan.
We've compiled a list of gold loan interest rates currently being offered by some of our country's leading banks and non-banking financial companies (NBFCs) — including SBI, HDFC Bank, Punjab & Sind Bank, BoI, PNB, and Muthoot Finance — to help you make informed decisions. Each of the lenders listed in the table below has provided indicative EMIs for Rs 5 lakh gold loans taken for a three-year term.
The Gold Loan is a product that allows you to secure a personal loan by using gold ornaments or jewellery as collateral. When gold is used as collateral, the loan amount is determined by the amount pledged. Personal finance criteria include things like education, vacations, and medical emergencies. The use of funds is not taken into account when deciding whether or not to sanction funds.
- Gold Loan Per Gram has to be reasonable. We only consider the lowest advertised gold loan interest rates for each of the lenders, have not included processing fees or any other charges for EMI calculation. The rates applicable to you may differ depending on the amount of your loan, the LTV ratio, the loan tenure, or any other terms and conditions of your chosen lender.
- The lenders examine the purity of the gold. Your gold ornaments' market value is then calculated using the gold rate on the day the loan is approved. You will receive up to 90% of the value of the gold pledged. When you pledge gold ornaments, the lender only looks at the gold parts when calculating the value; other metals, stones, and gems aren't considered. Banks have the authority to foreclose. Banks charge a nominal closure fee of up to 2% plus GST as foreclosure charges when an account is closed within three months.
- If you fail to repay the loan by the due date, the bank will send you an alert and charge you a late payment fee as a penalty.
- Most banks charge penalty fees of up to 2% per year in addition to the applicable interest rate. If you fail to repay the loan despite repeated reminders, the bank may seize and sell your pledged gold to recoup the unpaid balance. As a result of this, your credit score will suffer.
- You'll need Aadhaar or PAN as proof of identity, utility bills as proof of address, proof of income, and passport-size photographs when applying for a gold loan. The minimum and maximum loan amounts vary by bank. Similarly, depending on the bank, gold loan terms range from three to 36 months. Most lenders give processing fees of up to 1.5 percent of the loan amount, plus GST, which must be paid before the loan is approved. Banks charge valuation fees in addition to processing fees. A public sector bank should be your first choice because interest rates are lower than private sector banks and non-banking financial companies (NBFCs). You must bring your gold ornaments with you when applying for a gold loan to pledge them as collateral.