Gold Loan Interest Rates In India 2023
In India, gold isn't just a metal; it's so much more. It has decorative value and is a popular investment and savings option for many people. Apart from purchasing gold for investment or savings, many people choose gold loans, a type of credit that is fast gaining popularity.
In a country like India, where gold is prized, a gold loan is simple to secure. Anyone with idle gold in the form of jewelry can pledge it to receive financial assistance. This form of loan is advantageous since it allows people to obtain funds without having to sell long-term investments.
Gold loan interest rates in India
A gold loan is one that is secured by giving gold as collateral. It is a secured loan in which the lending bank/NBFC takes gold items as collateral, such as gold jewelry, ornaments, and so on. The borrower is issued a loan with this gold as security.
As is the case with most loans, the bank's interest rate is proportionate to the amount of the loan. As a result, be prepared to pay a higher interest rate if you want a large loan. The quantity and character of the gold papers determine the maximum gold loan amount. The objects are also examined by a bank-appointed appraiser for uniformity and quantity.
However, since this is a secured loan, the rate of interest is lower than it is for unsecured loans such as personal loans.
The interest rate provided to applicants is influenced by the MCLR (Marginal Cost of Fund Based Lending Rate) or RRLLR (Repo Rate Linked Lending Rate). Banks that offer gold loans secured by the RRLLR are significantly quicker to notify borrowers when the RBI lowers the repo rate.
Comparison of gold loan interest rates 2023
Charges associated with a gold loan
The borrower is frequently forced to pay processing charges/fees to get loans such as home, auto, and personal loans.
Apart from processing fees, an applicant for a gold loan may be required to pay for the valuation of gold that will be used as collateral by the lending institution. For example, HDFC Bank charges Rs 250 for loans up to Rs 1.5 lakh and Rs 500 for loans exceeding Rs 1.5 lakh as valuation costs.
A bank can charge paperwork and foreclosure fees in addition to processing and valuation fees.
As a result, you should confirm all fees and charges with the bank or NBFC before taking out the loan.
Eligibility criteria for a gold loan
The loan per gram of gold or the loan amount, which is calculated by the value of gold pledged (based on gold price), purity of gold, and the LTV applied by banks, determines gold loan eligibility.
The price of gold is computed using the 30-day average price of 22-karat gold and the loan-to-value provided by your bank. The amount of your Gold Loan EMI is decided by your loan eligibility, interest rate, and loan tenure.
Several lenders offer loans based on gold pledges with low-interest rates. The loan amount is determined by the quantity of gold you promise. The loan amount per gram varies depending on the bank.
Additionally, your credit score, age, income, etc. will also play a role in determining your eligibility for a gold loan.
Documents required to get a gold loan
The bank or NBFC will require you to present several documents in order to obtain a gold loan, such as -
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Proof of identity Passport (Driving license, PAN, Aadhaar, etc.)
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Proof of residence (Voters’ ID, Passport, Aadhaar, etc.)
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1 passport size photograph
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Agri Allied Occupation Documentation (in case of bullet repayment for agriculture customers).
