List Of Banks Providing The Cheapest Interest Rates On Gold Loans Starting From 7%

Gold loan eligibility

You must make sure to follow the eligibility requirements stated by the lender if you want to take advantage of a loan against your gold jewellery or ornaments. Bear in mind that eligibility conditions differ from one lender to the next. Therefore, before applying for a gold loan, it is prudent to review the eligibility conditions stated on the lender's official site. The below are the standard eligibility requirements:

• The minimum age limit of the applicant must be 18 years or above
• To pledge it as security, he or she must have gold ornaments or articles
• The maximum carats of gold that can be pledged must be at least 18 carats.
• The applicant must have the acceptable credit score for taking a gold loan. 

Documents required for a gold loan

The following documents must usually be provided by the claimant in order to take advantage of the gold loan:

• Duly filled loan application form
• Two recent passport size photographs
• Form 60 or PAN card
• Identity proof: Driving license, Aadhaar Card, ration card, PAN Card
• Address proof: Aadhaar card, voter id card, electricity bill, telephone bill, etc.
• Signature Proof

Key benefits of taking a gold loan

A gold loan can be used to cover a range of emergency cash needs, namely hospital expenses, schooling of your child, family holidays and so on. If you're in a bind and need money right then, you should use the wonderful gold in your vault to cover your immediate financial requirements. Gold loans are available from a number of banks and non-banking financial companies (NBFCs). This loan is among the cheapest and most hassle-free options to get immediate cash. To know more about the benefits read out the below-listed facts:

• Because gold loans are supported by physical gold, lenders typically process the loan faster, so borrowing against gold is secure for banks and if you fail, they have the ability to sell the gold.
• The gold pledged to the bank or the financial institution serves as the security or collateral against which the loan amount is credited to the applicant. Gold loans have a spectacular aspect in that the applicant can pay only the interest portion of the loan and the principal balance can be repaid at the time of the loan's closure.
• Banks offer lower interest rates on secured loans than on unsecured loans like personal loans because they are secured.
• Most of the NBFCs and banks do not impose processing costs because these loans are issued immediately in favour of gold retained by the lender as security.
• Most of the banks impose a prepayment penalty of 1 per cent only.
• Because the loan is guaranteed against the gold to be held with the bank, most lenders do not need income proof.
• In comparison to other loans, where the loan amount is calculated based on the borrower's potential to reimburse and credit score, the circumstance with gold loans is specific. As the gold is used as security, the lenders are not bothered with the key factor and therefore do not verify the borrower's creditworthiness. 

Things to consider while applying for a gold loan

A few factors that you must evaluate when applying for a gold loan are mentioned below:

• The amount of the loan you get will be dependent on the worth of the gold you vow when you take advantage of a gold loan. A minimum and maximum loan amount could also have been specified by lenders. If you need a specific loan amount, please ensure you have the appropriate gold and that it falls under the lender's guidelines.
• The interest rate charged on a gold loan is lower than opposed to an unsecured loan, as the investor will have to provide security. This being said, the interest rate levied will differ from lender to lender, and comparing the interest rates charged by various lenders will be the best approach.
• Lenders can impose a variety of other fees in comparison to the interest rate, such as processing fees, documentation fees, appraiser fees, default payment fees, overdue loan fees, etc. These costs, together, can increase the overall cost of the loan. Thus, make sure that before applying for a gold loan, you take into consideration the charges charged by the lender.
• The repayment period on gold loans will be anywhere between three to 36 months. You should also be careful to take the repayment potential into account and choose a gold loan with an acceptable tenure.
• Before applying for a loan, it is generally advised that you compare the attributes, advantages, and terms and conditions of the gold loans provided by various lenders.
• To maximise the likelihood of your loan application being accepted, before applying for the loan, you must review the eligibility conditions of the lender.   

Gold Loan Interest Rates

Below are the cheapest interest rates on Rs 5 lakh gold loans availed for a three-year term presently promised by some of the leading banks. Please bear in mind that your interest rate can vary depending on the amount of your loan, the period of your loan, or any other terms and conditions imposed by the bank or NBFC.

Note

For loans approved by banks against the promise of gold ornaments and jewellery for non-agricultural reasons -, the allowable loan-to-value (LTV) ratio was raised to 90%. Only loans approved before March 31, 2021, will be eligible for the change. The former LTV cap of 75 per cent will apply to gold loans sanctioned on or after April 1, 2021. Banks will now lend up to 90 per cent of the amount of the gold ornaments that individuals have promised to them, compared to 75 per cent previously.