If you’re planning to apply for a gold loan, you might want to compare your options for the lowest interest rates and processing fee, among other charges.
Lower interest rates than unsecured financing options like personal loans on most occasions, availability of the required collateral and easy loan disbursal process make gold loans one of the most popular financing facilities in India. In fact, gold loans can not just come to the urgent rescue of the cash-strapped but also help fulfil our critical life goals.
The fact that countless Indian households have gold ornaments or coins in possession makes gold loans a viable option to raise cash to meet any urgent requirement. The prices of the coveted yellow metal may have just started dipping after reaching record-highs earlier this year, but they’re still a lot higher than what they were a year back – something that allows borrowers to get a substantial loan amount against their household gold, according to BankBazaar.
In addition, the Reserve Bank of India in a bid to help people solve cash-flow issues necessitated by the Covid-19 pandemic allowed lenders in August to increase the maximum loan-to-value ratio (LTV) of gold loans from 75% to 90% until March 31, 2021. This too could help people get a bigger loan on the same amount of gold to meet their liquidity requirements.
However, if you’re planning to apply for a gold loan, you might want to compare your options for the lowest interest rates and processing fee among other charges. Also check the purity of the gold you’re planning to pledge and whether that would help raise the necessary amount to meet your requirements. Do note that if you have a very high LTV and in case the gold prices correct drastically during the tenure of the loan, the lender might ask you for a part-prepayment (cash call) or more security to meet the shortfall.
However, lenders usually consider the monthly average of gold prices and keep sufficient margins while ascertaining the applicable interest rate which can easily absorb short-term or nominal corrections in gold prices during the loan tenure. Most importantly, you must have a proper repayment plan before taking any loan as any laxity in repayments could lead to additional interest penalties, loss of a precious asset (if it’s a secured loan like a gold loan) and an impacted credit score, informs BankBazaar.
Here are 10 banks which are currently offering the lowest gold loan interest rates in the country.
10 Banks Currently Offering the Lowest Interest Rates on Gold Loans
Disclaimer: Data collected from respective banks’ websites on October 15, 2020. Lowest advertised rates offered by the banks are considered in the table. Compiled by BankBazaar.com