In a country like India, where gold is prized, a gold loan can be easily secured.
Let’s take a look at the interest rates offered by popular gold loan providers in India as well as how to get a gold loan.
A gold loan is a secured loan where the gold is pledged as a collateral.
The quantity and character of the gold in question determine the maximum loan amount that you can get. The objects are also examined by a bank-appointed appraiser for uniformity and quantity. Since this is a secured loan, the rate of interest is lower than other unsecured 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.
|
Name of the bank/NBFC |
Rate of interest (p.a) |
Processing fee |
Loan amount (in Rs.) |
|
SBI |
8.55% onwards |
Nil (Till 31 March, 2023) |
Rs.20,000 to Rs.50 Lakh |
|
HDFC Bank |
7.60%-16.51% |
1% of disbursal amount |
Rs.10,000 onwards |
|
Canara Bank |
9.15% (women borrowers) |
Applicable charges + GST |
Rs.5,000 to Rs.35 Lakh |
|
Axis Bank |
17% |
0.50% |
Rs.25,001 to Rs.25 Lakh |
|
Kotak Mahindra Bank |
8%-17% |
Up to 2% + GST |
Rs.20,000 to Rs.1.5 Crore |
|
ICICI Bank |
10%-17.95% |
1% of loan amount |
Rs.50,000 to Rs.1 Crore |
|
IndusInd Bank |
8.75%-16% |
1% of loan amount |
Up to Rs.20 Lakh |
|
Punjab National Bank |
9% |
0.35% of loan amount + GST |
Rs.25,000 to Rs.25 Lakh |
|
Bank of Maharashtra |
9.05% |
No processing fee for loans up to Rs. 3 Lakh. |
Rs.20,000 to Rs.25 Lakh |
|
Bank of Baroda |
8.85% |
No processing fee for loans up to Rs. 3 Lakh. |
Up to Rs.50 Lakh |
|
Federal Bank |
8.64% onwards |
0.35% to 0.80%, based on scheme |
Rs.1,000/- to Rs.150 Lakh |
|
Muthoot Gold Loan |
9%-22%, depending on the scheme the number can vary |
Applicable charges + GST |
Rs.1,500 onwards, no upper limit |
Taking a gold loan in India is quite simple. All you need to do is -
Fulfill the eligibility criteria provided by the lender
Provide necessary documents
Pledge your gold/equivalent amount as collateral
Receive the loan amount in your account within a few days
When you avail a loan, be it a personal, home, or gold loan, you need to pay a processing fee. It mostly is nominal and involves the charges for the administrative costs that are borne by the bank or NBFC while processing your loan.
Apart from this, when you apply for a gold loan, you 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.
If you want to foreclose your loan, you might have to bear the necessary foreclosure charges as per the guidelines of the vendor. Some banks or NBFCs might have hidden charges, thus you should confirm about all kinds of fees and charges before taking a loan.
The loan per gram of gold or the loan amount is calculated by the value of gold pledged (based on gold price), purity of gold, and the LTV applied by banks. All these factors determine gold loan eligibility. The loan amount will finally depend on the quantity of gold you promise and your vendor.
The other eligibility criteria for a gold loan is similar to any other loan. Your credit score, age, income, etc. will play a role in determining your loan amount and also your EMI.
The bank or NBFC will require you to present several documents in order to obtain a gold loan, such as -
Proof of identity Passport (Passport, Driving license, PAN, Aadhaar, etc.)
Proof of residence (Voters’ ID, Passport, Aadhaar, etc.)
1 passport size photograph
Agri Allied Occupation Documentation (in case of bullet repayment for agriculture customers).
To get a gold loan, you need to pledge your gold jewelry or goods to the vendor. The money is disbursed to you as usual. Once you repay the money throughout your tenure, your gold will be given back to you.
Most banks or NBFCs that provide gold loans, give loans against just gold jewelry. Even in gold, it is easier to get a loan against 22K gold. But some vendors even provide loans against 18K gold.
The repayment process starts immediately, with the borrower expected to pay EMIs once a month after the loan is approved. However, this process can vary based on the terms and conditions imposed by the lender.
The minimum and maximum amount of gold loan that you can get varies from vendor to vendor. Gold loans start from as low as Rs.1000, given by Federal Bank.
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