A gold loan or loan against gold could be compared to a personal loan, but usually does not carry any end-use restrictions. Also, the interest rates on loans against gold are comparatively lower than other types of loans.
Advantages of a Gold Loan
- Available To A Larger Number Of People – To avail a gold loan, applicants are usually not required to furnish any documentation like salary slips, certificates, credit history, bank statements, etc. Due to this reason, even non-working or unemployed individuals can apply and avail a loan against gold. Some banks or lenders may however require gold loan applicants to furnish a proof of ownership of the gold ornaments which they’re pledging.
- No Extensive Documentation Required – Unlike other types of unsecured loans, a loan against gold does not require you to furnish extensive documentation for application. You will only be asked to provide basic documents for proof of identity and proof of residence to avail a gold loan.
- Comparatively Lower Interest Rates – One of the most important advantages of a gold loan is the lower interest rate it is available at. While other types of loans like personal loans are normally available at interest rates ranging between 15% to 26%, a loan taken against gold, i=on the other hand, can be availed at a significantly lower interest rate ranging between 12% to 16%.
- Simpler Alternative To A Personal Loan – A loan against gold or a gold loan is a fairly simpler alternative to taking a personal loan, especially in terms of documentation. For a gold loan, you only need to take your gold jewellery to the bank or lender, where it will be verified and valued, before the loan amount is sanctioned to you. With a gold loan, you can expect to get a loan amount which could be as high as up to 80% of the market value of the gold.
- Repayment Options – Banks and lenders usually provide flexible repayments terms for loans taken against gold. Borrower will be given an option to pay only interest during the entire term and at the end of the tenure you can pay complete borrowed amount in single shot.
- Quick Loan Processing & Loan Disbursal – Unlike other types of loans which usually have longer waiting periods between loan application and loan disbursal, loans against gold have a comparatively lesser wait period. In most cases, banks and lenders will approve and disburse the loan within a few hours or sooner, once the gold ornaments have been verified and undergone valuation for weight and purity. If you are looking to get a loan in the minimum possible time, a gold loan may be your best bet.
What are the Banks Offering Gold Loans
In India, there are many banks and non-banking companies which offer customers loans against gold. Most banks and lenders also offer multiple gold loan schemes to allow customers to avail gold loans as per their requirements. Some of the top banks which provide loans against gold are listed as follows:
- ICICI Bank – Provides gold loans under the EMI Scheme at an interest rate ranging between 12 % to 16.50%.
- State Bank of India – The nation’s largest public sector bank provides loans against gold at 2.50% above the base rate of 9.85%. The current rate of interest for loans against gold ornaments (demand loan) is 12.50%.
- Axis Bank – Provides loans against gold under the EMI Scheme and the Bullet Repayment Scheme. The bank provides loans against gold at interest rates between 14.50% up to 17 %.
- Muthoot Finance – One of the very first companies to introduce the facility of gold loans in India, Muthoot Finance provides multiple gold loan schemes with differing rates of interest and tenures. The interest rates for the various gold loan schemes range from between 12% and up to 24%, for loans featuring different time periods.
- Punjab National Bank – Provides gold loans under the Bullet Repayment Scheme, EMI Scheme and the Overdraft Scheme. The interest rates for this loan range between 11.10% to 12.10%.
- Manappuram Finance Limited – One of India’s highest credit rated companies, Manappuram Finance also offers customers a variety of gold loan schemes like the EMI scheme and Bullet Repayment Scheme. Interest rates for Manappuram Gold loans range between 12.00% to 26.00%.
- IndusInd Bank – Provides gold loans against gold at interest rates ranging between 13.50% to 15.50%.
- Canara Bank – Canara Bank offers the Swarna Loan (loan against gold) to its customers under the Bullet Repayment Scheme at 3.10% above the base rate of 9.65%. The applicable interest rate is 12.75%.
- HDFC Bank – Offers the Sampoorna Bharosa gold loan, a highly affordable gold loan which can be availed at any HDFC bank branch. This gold loan comes with very convenient terms and is offered at an interest rate ranging between 6.70% to 15.65%.
- Federal Bank – Offers two different types of gold loans under the Overdraft Scheme and the Bullet Repayment scheme. The interest rates applicable on these gold loans range between 13.00% to 13.50%.
Gold Loan Interest rates
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Bank Name Gold Loan Interest Rates ICICI Bank 12 % to 16.50 % State Bank of India 12.50 % Muthoot Finance Limited 12 % to 24 % Axis Bank 14.50 % to 17 % Punjab National Bank 11.10 % to 12.10 % Manappuram Finance Limited 12 % to 26 % IndusInd Bank 13.50 % to 15.50 % Canara Bank 12.75 % HDFC Bank 6.70 % to 15.65 % Federal Bank 13 % to 13.50 %