A gold loan is provided to address immediate financial needs by pledging gold, including ornaments, jewelry, or coins, as collateral with the bank or lender. Interest is levied on the borrowed sum, and upon complete repayment of the loan, the pledged gold items are returned securely. Generally, lenders offer gold loans with interest rates beginning at 8.75% per annum.
| Lenders | Interest Rate |
|---|---|
| State Bank of India | 8.75% p.a. onwards |
| Axis Bank | 17% - 19% p.a. |
| Punjab National Bank | 9.25% p.a. onwards |
| Bank of India | 8.80% p.a. onwards |
| Canara Bank | 9.25% p.a. |
| ICICI Bank | 10% p.a. |
| Bajaj Finserv | 9.50% – 28% p.a. |
| India Gold | 0.77% per month |
| IIFL Finance | 11.88% - 27% p.a. |
| Rupeek | 8.88% p.a. onwards |
Factors influencing the interest rate on gold loans include:
Loan Amount: The interest rate applied by the bank correlates with the loan amount. Consequently, higher loan amounts may incur higher interest rates.
Price of gold in the market: When the price of gold is high, the value of your pledged gold ornaments or coins also increases. In such situations, lenders may offer you a lower interest rate because the risk involved is lower. If you're unable to make your monthly payments, the lender can recover the outstanding amount by selling or auctioning the gold ornaments without much difficulty.
Inflation: When inflation rates are high, the value of currency decreases, leading individuals to seek more gold as a safeguard. Gold serves as a hedge against prolonged inflationary periods, causing gold prices to rise. During such times, lenders may offer lower interest rates for gold loans, as gold's value acts as security against inflation.
Relationship with the bank: Many lenders extend gold loans primarily to their existing customers, although individuals without prior banking history may also be eligible in certain cases. However, existing customers generally have an advantage in negotiating for lower interest rates with banks or lending institutions.
To avail a gold loan, applicants need to have their personally owned gold, gold ornaments, or coins evaluated by an appraiser designated by the bank. Additionally, they must be at least 18 years old, possess a stable income, and not exceed 65 years of age.
Banks typically request the following documents for a gold loan application. Any additional requirements will be communicated by the bank during the application process:
There are several methods available for repaying your gold loan amount:
Yes, certain gold loan schemes permit partial payments. However, your pledged gold ornaments will be released only upon the complete repayment of the outstanding amount.
Yes, you have the option to foreclose the loan account. However, it's important to note that foreclosure charges may apply.
Gold loans are accessible to individuals aged 18 and above who possess gold ornaments or items. Additionally, applicants must fulfill the bank's internal eligibility criteria.
Gold loans are disbursed on the same day of application. However, there might be a delay as the bank conducts the appraisal of your gold articles. Once the gold items have been appraised and verified, you can expect swift disbursal of the loan amount.
You have multiple options for repaying the loan amount, including cash, cheque, Demand Draft (DD), or fund transfer. Additionally, you can utilize the bank’s mobile app for convenient repayment.