When financial emergency strikes, we often need money without any delay. Though there are multiple options to borrow, a gold loan is one of the quickest ways to arrange funds. It is a secured loan where your gold jewellery is taken as collateral, and the bank or financial institutions provide the loan.
The amount of the loan depends on the value of your gold. You will have to hand over the gold to the lender when you avail of the loan. The lender will return once the entire amount is repaid. Since it is a secured loan, it is available at low-interest rates.
Gold loans can be availed to meet financial needs such as paying educational fees, medical expenses, vacation etc. The gold acts as the security against which the loan amount is provided.
The tenure may vary from lender to lender. It may typically range from a minimum of 3 months to a maximum of 48 months. There might be charges applicable on a gold loan, such as processing fee, late payment charges, penalty for non-payment of interest, valuation fees, etc.
You will have to repay the loan in EMIs for the tenure you have selected at the time of borrowing. It is, therefore, essential to read the loan agreement and terms and conditions carefully.
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If your credit score is good and you have a clean repayment history, you can negotiate for cheaper interest rates. Also, some institutions might give you discounts during festive seasons on interest rates. It is advisable to repay your loan on time without delay. If you delay your loans, lenders can levy a penalty on the amount, and if you still don’t pay, your gold can be auctioned to recover the loan.
Before you borrow, you must check the institution and its records. Your gold needs to be safely returned to you as soon as you repay the loan fully. You must check your gold when receiving it and only sign the papers after you are satisfied.
Always try to choose a reputed institution and compare the interest rates of different banks and other financial institutions. Go for the one that suits your requirement and give you the most competitive interest rate on a loan.
The table below will help you compare the interest rates for Rs 5 lakh loan for two years of tenure and the EMI. You can compare and choose as per your needs.
Interest Rates & EMI on Gold Loan
Compiled by BankBazaar.com
Note: Interest rate on Gold Loan for all listed (BSE) Public-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 31 Jan 2023. 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 Lakh Loan with a tenure of 2 years (processing and other charges are assumed to be zero for EMI calculation); **with rebate.