Table of Content
What is a Gold loan?
Gold loan or loan against gold is a secured loan which the borrower takes after pledging gold (coins, bars or ornaments) as collateral to the lending agency. This is one of the most popular loan options available, owing to its easy accessibility and instant money disbursement.
What are the requirements to get a Gold loan?
The best part about gold loans is that they are easy to obtain. Just like all other secured loan schemes, a collateral is the primary focus point of the lender in case of gold loans too. In addition to the collateral, copies of your personal documents like PAN card, address proof and ID proof are also required for the approval of a loan.
You can get a gold loan even if you have a low credit score (Learn: How to better your credit score?) which is unlike other loan options, most of which have a strict eligibility criteria. Another good thing is that anyone, right from a housewife to a farmer is eligible for getting this kind of a loan. This uniformity of eligibility criteria makes it one of the most sought after loan options.
What is the amount offered in case of Gold loans?
The amount offered by the lender depends on the kind of gold collateral you offer. Typically, bank issued gold coins and bars have a higher value as compared to gold jewellery. The lender checks for the purity of the gold product that you have offered in addition to its weight.
The loan amount is mostly 60-75% of the actual market value of the offered gold on that day. This means that if the value of the pledged gold is Rs.1,00,000 than the amount of loan that the lender will offer you will be nearly Rs.60,000 to Rs.75,000.
How does the lender decide the interest rate for Gold loans?
Interest rates for gold loans are usually on the lower side as compared to other loans schemes, most of which are unsecured like personal loan. The reason being that it’s one of the few secured loan options and unlike other secured loan offerings like car loan or house loan, the money from this one can be used to fulfill any personal need, be it for getting a new appliance home or meeting an unplanned medical emergency.
The interest rates offered depend on multiple factors including the weight and the quality of the gold you have offered as collateral. Banks generally offer a better interest rates as compared to NBFCs. Make sure you check multiple lenders before you agree to take the loan from a specific one.
How do you repay a Gold loan?
The USP of these loan schemes is that most lenders allow the user to pay off the principal amount at the end and the interest on monthly basis. There is also the more common option of paying EMIs that is allowed in which the user pays off the principal and the interest amount every month.
What are the banks that offer the best Gold loan schemes?
We did a bit of research and came up with a list of trusted banks and NBFCs that offer the best loan schemes. They offer the best interest rates and most flexible payback tenure. They are:
1. SBI gold loan
It’s no surprise that SBI is right at the top of this list. This government bank has the cheapest interest rates in addition to really low processing fees.
|
Loan amount |
Up to Rs 50 lakhs |
|
Interest rates |
0.85% to 1.25% |
|
Processing fee |
0.50% of the Loan amount + applicable GST (Minimum Rs. 500/- + applicable GST). |
|
Loan Tenure |
Up to 3 years |
2. HDFC Bank gold loan
The top limit of the loan amount offered by HDFC is great. That, in addition to low processing fees makes it one of the best loan options available in the market. Bonus: You have the option of repaying only the interest on the loan every month and the whole principal amount can be repaid in the end.
|
Loan amount |
Starting at Rs. 25,000 |
|
Interest rates |
8.95% to 17.20% |
|
Processing fee |
1% of disbursal amount |
|
Loan Tenure |
3 months and up to 2 years |
3. Axis Bank gold loan
Axis bank schemes for loan against gold, offer quick disbursal and minimal processing fees, making it one of the most popular loan options.
|
Loan amount |
Starting at Rs. 25,000 and up to Rs. 25 lakhs |
|
Interest rates |
Starting from 7.35% |
|
Processing fee |
0.5% + GST |
|
Loan Tenure |
6 months and up to 3 years |
4. Canara Bank gold loan
Canara bank loan is another popular option for the customers. Smooth process and minimal processing fees make it a top choice.
|
Maximum amount |
Starting at Rs. 5,000 and up to 20 lakhs |
|
Interest rates |
Around 7.35 % |
|
Processing fee |
0.5% of the loan amount |
|
Loan Tenure |
Up to 1 year |
5. ICICI gold loan
ICICI bank offers loan schemes with minimal documentation and a repayment option of 6 months or 1 year. Also, ICICI bank gives us the option of paying the whole amount at the end of the loan tenure so that facilitates loan repayment.
|
Maximum amount |
Starting at Rs. 10,000 and up to Rs. 1 crore |
|
Interest rates |
Starting from 11% |
|
Processing fee |
1% of loan amount +GST |
|
Loan Tenure |
6 months to 1 year |
6. IIFL gold loan
IIFL loan schemes get approved under 5 minutes and have a quick disbursement period of 30 minutes. What’s not to like?
|
Maximum amount |
Starting from Rs.30,000 |
|
Interest rates |
Starting from 12% excluding GST |
|
Processing fee |
Rs. 0 onwards depending on the scheme |
|
Loan Tenure |
Up to 2 years |
7. Manappuram gold loan
Mannappuram is one of the most trusted loan providers in the market. Established in 1949, it’s one of the leading gold NBFCs with minimal processing fees and high loan amount.
|
Maximum amount |
Starting at Rs. 1,000 and up to 1.5 crores |
|
Interest rates |
Starting from 14% |
|
Processing fee |
Rs. 10/- for all schemes at the time of settlement |
|
Loan Tenure |
3 months |
8. Muthoot finance gold loan
Muthoot Finance Ltd. is one of the most popular loan providers in India. The loan amount has no top cap and the money gets instantly disbursed with minimal documentation.
|
Maximum amount |
Starting from Rs.1,500 with no maximum limit |
|
Interest rates |
Starting from 12-27% |
|
Processing fee |
— |
|
Loan Tenure |
From 7 days to 1 year for normal schemes and 3 years for EMI based schemes |
