Whenever you are in an emergency or urgently need money, you can approach the lender and borrow funds against your gold, that will be used as collateral.
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Gold loan is a secured loan. Whenever you are in an emergency or urgently need money, you can approach the lender and borrow funds against your gold, that will be used as collateral. Often people have concerns that their gold might be at risk if they use it as collateral, but reputed lenders ensure that you get your gold on the same conditions after you have fully repaid your loan. If you have gold in any form, that is jewellery, coins etc., then the same can be used as collateral for borrowing loans.
When choosing a gold loan, there are several factors to consider before making the best decision for your financial needs. Here are some tips:
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Interest rate: Check the interest rates of different lenders and compare them to find the lowest interest rate. Choose a lender who offers a competitive interest rate.
Loan-to-value (LTV) ratio: LTV ratio is the maximum amount of loan you can get against the value of your gold. Check the LTV ratio of different lenders and choose a lender who offers a higher LTV ratio.
Processing fees: Check the processing fees of different lenders and choose a lender who charges a lower processing fee.
Repayment options: Check the repayment options available with different lenders and choose a lender who offers flexible repayment options.
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Loan tenure: Check the loan tenure of different lenders and choose a lender who offers a longer loan tenure.
Credibility of the lender: It is important to choose a credible lender who is known for transparent practices, good customer service, and quick disbursal.
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Loan amount: Check the loan amount offered by different lenders and choose a lender who offers the maximum loan amount as per your requirement.
Gold Assessment: The lender will typically verify the purity, weight, and market value of the gold that is being pledged as collateral. This is done to determine the loan-to-value (LTV) ratio and to ensure that the gold is genuine.
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You can choose the right gold loan that suits your financial needs and offers maximum benefits by applying these tips. The table below helps you compare the interest rates of different lenders and EMIs for a loan of Rs 5 lakh for 2-year tenure. You can take a decision based on your financial requirements.
Interest Rates & EMIs on Gold Loan of Rs 5 Lakh for 2-Year Tenure
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 25 April 2023. 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.
