Loan against gold or gold loan is a popular medium to borrow money from financial institutions. When you fall short of funds, a gold loan is the easiest way to arrange money to meet your immediate requirements.
Gold is considered as one of most valuable and safest investment assets. It holds both financial and religious importance in India. Gold is a movable asset that can be used as a collateral to arrange funds to finance your needs, such as education, medical emergency, marriage etc.
Loan against gold or gold loan is a popular medium to borrow money from financial institutions. When you fall short of funds, a gold loan is the easiest way to arrange money to meet your immediate requirements. In comparison to other loan types, gold loans require less documentation and disbursement can happen immediately.
Typically, all lenders including banks and other financial institutions offer loans against your gold. If your gold is pure and meets other criteria, then funding is easily available as it is less risky for lenders.
However, you need to compare the interest rates, tenure, and other details before pledging your gold as a collateral. It is also advisable to consider the other fees and charges that might be applicable on a gold loan– processing fee, late payment charges/ penalty for non-payment of interest, valuation fees, etc, according to BankBazaar.
A reputed institution will ensure the safety of your gold till the time you have fully paid your loan. You can avail funds up to 75% of the pledged gold value but this may be lesser or higher depending on the purity of your ornaments etc. The higher the value of your gold, the higher will be the loan amount.
It is essential to check the current gold price and assess the amount you need vis a vis you can get by pledging your gold. The tenure of your gold loan can range from a minimum of 3 months to a maximum of 48 months. You can calculate the interest basis the tenure you choose for your gold loan.
Many lenders offer the option of discount on the prevailing interest rate on the loan against gold if the borrower repays the interest regularly. This rebate can be 1% – 2% off on the original rate of interest.
These days both public sector banks and private banks along with non-banking finance companies (NBFCs) are offering gold loans to their prospective customers. However, it is good to perform your due diligence and avoid delay and default in repayments. If you fail to repay the gold loan, lenders can sell your pledged gold to recover their outstanding amount.
The table below provides the indicative EMIs for gold loans from different lenders for a loan of Rs 5 lakh taken for a period of 2 years.
Interest Rates & Indicative EMIs on Rs 5 Lakh Gold Loan
Compiled by BankBazaar.com
Note: Interest rates on Gold Loans 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 11 Jan 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 lakh loan with tenure of 2 years (processing and other charges are assumed to be zero for EMI calculation); *APR for Qtr JUL to SEP 21; ^For Covid warrior; **without rebate
Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.