Gold Loan is one of the quickest ways to raise finance. If you are in urgent need of cash, you can make use of gold kept at your home.
It is a known fact that we have a ritual to purchase gold in India. Gold is purchased at every auspicious occasion including festivals. Gold is considered a trusted partner in bad situations. Every lower and middle-class family is holding gold in small or big proportion at home.
If you are facing a cash crunch due to COVID-19 you can go for gold loans. You need to pledge gold ornaments lying at home to get gold loans. You can get a loan up to 90% of your gold value. Gold loan is available at all banks and NBFC. The interest rate of gold loans is low compared to the personal loan.
If you are planning to take Gold Loan (or loan against gold), you should go through the article given here. In this post, I will cover – What is Gold Loan? Top Gold Loan – Interest rate comparison and information about how to avail gold loans?
What is Gold Loan?
The gold loan is a loan against gold. It is a secured loan option in which you need to submit your gold jewelry as collateral. The rate of interest of gold loans is low compared to the personal loan. The amount of loan is sanctioned against gold value.
Repayment of a gold loan is to be done in EMI, once all principal and interest are paid you will get your gold jewelry/ornaments back from the lender. Gold Loan can be used for any purpose be it fund for weeding, education requirement, family vacation, medical emergency, or any other financial need.
Gold loans are available at most of the private, nationalized banks and NBFC at affordable interest rates.
Also Read – Best Gold Loan Options in India 2020
Top Gold Loan – Interest Rate Comparison -2020-21
|Bank||Gold Loan Interest Rate||Maximum Loan|
|SBI||7.30% to 7.50%||50 Lakh|
|Bank of India||7.40%||10 Lakh|
|Canara Bank||7.65%||20 Lakh|
|Bank of Maharashtra||7.50%||20 Lakh|
|Lakshmi Vilas Bank||8.80%||30 Lakh|
|Punjab National Bank||8.60% to 9.15%||10 Lakh|
|Central Bank of India||9.05%||20 Lakh|
|Punjab & Sind Bank||8.10% to 9.35%||30 Lakh|
|Federal Bank||8.50% onwards||1.50 Cr|
|United Bank||9.35%||10 Lakh|
|Karur Vysya Bank||10.10%|
|Indusind Bank||10.5% to 16%|
|Kotak Mahindra Bank||10.5% to 17%|
|HDFC Bank||9.90% to 17.90%|
|ICICI Bank||10% to 19.76%||1 Cr|
|South Indian Bank||11.90% to 12.40%||10 Cr|
|Axis Bank||13.00%||25 Lakh|
|Muthoot Finance||12% to 27%|
|Manappuram Finance||Max 29%|
Gold Loan – FAQ
How to apply for Gold Loan?
To apply for a gold loan, you need to visit a bank or NBFC branch along with Gold. You need to carry identity proof and resident proof. You need to fill up the application form available at Bank or NBFC branch. In most of cases, gold needs to submitted for authenticity check. Once the checking is completed your application will be approved. The time taken for the disbursal of loan is one or two days.
Who is eligible for Gold Loans?
Anyone who owns gold can apply for gold loans. This loan is not given to a minor. You need to submit your gold at the bank/NBFC. The amount of loan is sanctioned based on gold valuation and purity. Any stone and other things included in ornaments will not be taken into account while calculating valuation.
What is Gold Loan Tenure?
Gold loan tenure varies from 3 months to 5 years.
How Gold Loans repayment is done?
There are four options for making repayment of gold loans.
Regular EMI – You can select the regular EMI option if you have regular cash flow. In this case, you need to pay EMI on monthly basis.
Bullet Repayment – The second option is bullet repayment. In this option, you need to pay the entire principal and interest amount at the end of the loan term. It is known as bullet repayment.
Pay Interest as EMI & Principal later – Another option is pay interest as EMI & Principal later. Here you need to pay the interest amount as EMI and principal amount to be paid at the end.
Partial Payment – In this option, you can do a partial payment of loan principal as well as the interest component whenever you want during the loan tenure.
What happens in case of Gold Loan Default?
You should make sure that you do not default on gold loan. In case you are unable to pay the loan amount, the lender has the rights to auction your gold to recover the loan amount. So, if you are not sure about your future cash flow you should not take gold loans.
Why you should prefer Gold Loans?
There are many reasons to prefer gold loans. Details are given below.
- The interest rate of gold loans is low compared to personal loans.
- The tenure of gold loans is flexible. You can avail loan from 3 months to 5 years.
- There are multiple banks and NBFC offers these type of loans.
- The prepayment charge in most of the cases is NIL.
- Minimum document is required for this loan. Anyone can apply for this loan.
- The disbursal of loan is very fast.
Is it safe to pledge gold with bank and NBFC?
Yes! It is safe to pledge gold with a bank and NBFC. Most of the banks and NBFC keep gold in safety vault with a lot of security till the end of tenure. They act as a very good custodian of gold.
Over to you
Have you taken Gold Loans?
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