Whenever you need money and feel you want to use your gold, you can apply for a gold loan as per the mutually acceptable terms and conditions.
A gold loan is a secured borrowing taken by a borrower by pledging physical gold. The loan amount is decided based on your gold’s current market value and purity. It is quickly sanctioned, and the process of disbursement is also easy as you obtain funds against your gold.
Any businessman, salaried, self-employed, or other categories of borrowers can apply for a gold loan. Since there is a minimum documentation process, the loan is processed within a few hours to a few days. You can use the loan to meet any requirement, be it your medical emergency, marriage, renovation of your house or foreign trip. Apart from depositing your gold, you don’t need to submit any other collateral or security to the lender.
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Since your gold serves as a security, the interest rate on a gold loan is lower as compared to unsecured loans. Gold jewellery is rarely used to generate funds, but the gold loan can help you raise money to meet your financial requirements.
Whenever you need money and feel you want to use your gold, you can apply for a gold loan as per the mutually acceptable terms and conditions. Often gold loans are disbursed after the lender is satisfied with your gold purity and quantity as per your loan requirement. Besides, the lender may need you to show proof of ownership to avoid a dispute. You may need to submit the basic KYC to establish your identity before your gold loan is taken for giving you funds.
Suppose you fail to repay your gold loan. In that case, the lender sends you the reminders, and after a stipulated period as per the contract, penalty charges and interest are levied on the outstanding amount. After reminders, if you don’t pay, the lender can auction or sell your gold to recover the loan amount. You can repay the gold loan in easy EMIs calculated based on the interest and tenure. You can choose to repay every month, or some lenders may give you options to make one time-payment after a specific tenure. The repayment tenure may range between 1 and 5 years, but this may vary from lender to lender.
You can also foreclose or prepay your gold loan, but the lender may charge you additionally if you want to prepay within one year of the loan. Before signing the loan agreement, you must check the foreclosure charges and other terms and conditions.
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Finally, you need to compare the interest rates of different lenders and EMI based on the tenure you select and ensure that you are comfortable servicing the loan as per the loan agreement. Avoid delay or default as it may hit your credit score and makes borrowing difficult for you in the future. Choose a reputed lender who can ensure the safety of your gold items and returns you in the same conditions as you have given them.
The table below will help you compare the interest rates of a gold loan for Rs 5 lakh for a 2-year tenure along with the EMI. You can choose based on your requirements.
Interest Rates & EMIs on Gold Loan
Note: Interest rate on Gold Loan for all listed (BSE) Public-Pvt Banks and selected NBFCs considered for data compilation; Banks for which data is not available on their website are not considered. Data collected from respective bank’s website as on 23 Aug 2022. Banks are listed in ascending order on the basis of interest rate i.e. bank/NBFC offering lowest interest rate on gold loan (for various loan amount) is placed at top and highest at the bottom. Lowest rate offered by the banks/NBFC is considered in the table (Irrespective of loan amount). EMI is calculated on the basis of interest rate mentioned in the table for Rs 5 Lac Loan with a tenure of 2 years (processing and other charges are assumed to be zero for EMI calculation); **with rebate.
