A financial emergency can knock on anyone’s door. People get panicking when a financial emergency or immediate requirement for money arrives. However, it is the right time for your valuables, such as gold items, to help you overcome financial difficulties.
A gold loan is a secured loan where an individual can leverage his physical gold to the bank or other financial institution to borrow funds. Gold is used as collateral, and money is disbursed basis the gold valuation and the current market rate. You can use gold jewellery, coins, biscuits etc., as collateral to borrow money. Getting money by pledging your gold items is one of the easiest and quickest ways to arrange money when you need funds for marriage, your house construction, your children’s education, payment of your medical bills, etc.
Like any other loan, you can pay your gold loan in instalments, and once the entire borrowed money is repaid, you get your gold back in the same form and quantity as at the time of borrowing. Choosing a reputed and reliable lender for a gold loan is important to ensure the safety of your loan and services. The amount of loan you can borrow depends a lot on the purity of gold, the current market gold rate and some other factors which may vary from one lender to another, according to Bankbazaar.
Since it is a secured loan, you don’t need a high credit score. If your gold is pure and meets the lender’s eligibility criteria, the disbursal can happen within a few hours to a day. You also do not need too many documents as your gold is your collateral for the money you borrow. Therefore, banks incur lesser risks while lending funds to you.
Your repayment of gold loans may be one time with interest or payment through instalments. You need to check these options when borrowing and understand different schemes the financial institutions may offer you considering your requirements.
Typically, lenders will give you 80-90 per cent of gold value and the current market value of your gold. However, you must factor in borrowing costs such as processing and repayment charges and other fees lenders might charge you before disbursing your gold loan.
It is advisable to choose and compare the interest rates of different institutions and take a call based on your comfortability to repay that loan within a particular loan tenure you may choose. The higher the interest rate, the higher your liabilities will be. Therefore, choose the right tenure and repayment options to avoid problems later.
You must check all charges besides the interest rates on the gold loan being offered to you. It clears doubts related to the overall cost of the loan, and you know how much you must repay within a particular time. Choose a lender who can keep your gold items safely and return them to you in the same quantity and quality as you have handed them over.
The table below compares different institutions’ gold loan interest rates and EMIs. You can compare and choose the lender that gives you the best deals according to your requirements and gold valuation.
Interest Rates & EMI on Gold Loan
Compiled by BankBazaar.com
Note: Interest rate on Gold Loan for all listed (BSE) Public and Pvt Banks and selected NBFCs considered for data compilation; Banks for which data is not available on their website are not considered. Data collected from respective bank’s website as on 26 Jul 2022. Banks are listed in ascending order on the basis of interest rate i.e., bank/NBFC offering lowest interest rate on gold loan (for various loan amount) is placed at top and highest at the bottom. Lowest rate offered by the banks/NBFC is considered in the table (Irrespective of loan amount). EMI is calculated on the basis of interest rate mentioned in the table for Rs 5 Lac Loan with a tenure of 2 years (processing and other charges are assumed to be zero for EMI calculation); **with rebate.