A securitized loan like a gold loan is generally less expensive than unsecured loans like a personal loan. So a gold loan could be a convenient way to raise funds to achieve a financial goal or during any kind of emergency. Competitive interest rates, quick and easy disbursements and flexible repayment terms are some of the reasons that gold loans are one of the most popular financing facilities in our country.
Gold loans could be a good option even for borrowers who have a bad credit rating due to which they might not be eligible for an unsecured loan and even if they do the applicable interest rate. will likely be much higher than the rates charged to those with stellar credit scores.
In August of last year, the Reserve Bank of India announced to increase the allowable loan limit / value for gold loans (for non-agricultural purposes) from 75% to 90% of the value of the gold pledged in order to ease liquidity standards for the community people during the Covid-19 pandemic. This step, valid until March 31, 2021, allows borrowers to obtain a higher loan amount on the same amount of gold to better meet their financing needs, according to BankBazaar.
That being said, if you are looking for a gold loan, you should first check whether the value of your pledged gold would be sufficient to meet your lending needs. You should also compare your options to find the deal with the best repayment terms. You need to check things like interest rates, processing fees, pre-closing and partial prepayment fees, tenure flexibility, late payment fees, ease of loan application, etc. to make an informed selection.
Most importantly, make sure you have a comprehensive repayment plan so that you can pay your loan deadlines in full on time and avoid additional penalties and the loss of a valuable asset, according to BankBazaar.
To help you in that regard, here are the lowest interest rates on gold loans currently offered by some of the major banks and NBFCs in the country.
We have also provided indicative IMEs for Rs 5 lakh gold loans taken for a term of 3 years for each of the lenders. Please note that the interest rate applicable to you may be different depending on the amount of your loan, the duration of your loan or any other condition stipulated by your lender.
Indicative interest rates and IME for gold loans of Rs 5 lakh with terms of 3 years
Disclaimer: Interest rates on gold loans for all public and private listed banks (ESBs) and some NBFCs have been taken into account for the compilation of the data. Banks for which data is not available on their websites have not been taken into account. Data collected from respective websites on February 23, 2021. Lenders are listed in ascending order based on the lowest advertised interest rates on gold loans. The IMEs were calculated on the basis of the interest rates mentioned in the table for a loan of Rs 5 lakh with a term of 3 years (the processing fees and other charges are assumed to be zero for the calculation of the EMI) . * IRR for the quarter from October to December 2020. Data compiled by BankBazaar.com.