A gold loan is a secured loan that can be availed against a gold item or items. Its instant availability makes it the most preferred loan option in case of urgent requirement. Even after there are so many investment and finance options available in the market today, the importance of loan against gold is irreplaceable. Gold loan is a golden opportunity in fulfilling the instant requirement of funds. It also acts as a Credit Health Tonic – you can build your credit history by just keeping your gold in a locker, safe, and getting a simple low interest rate loan.
Top Banks Gold Loan Interest Rates October 2023
Below is a table showing the basic details of a gold loan at top lending institutions in India.
|List of Banks/Lenders||Loan Amount||Tenure||Gold Loan Interest Rate||Processing Fees|
|State Bank of India (SBI)||INR 20,000 to INR 20 lakhs||Upto 3 years||7.50%||0.50% + GST|
|ICICI Bank||INR 10,000 to INR 15 lakh||Upto 12 months||10.00% - 19.76%||1% + GST|
|Manappuram Finance||Upto INR 1.5 crores||Upto 12 months||12.00% - 29.00%|
|Axis Bank||INR 25,000 to INR 20 lakhs||Upto 3 years||13.00%||1% + GST|
|Kotak Mahindra Bank||INR 25,000 to INR 25 lakhs||Upto 3 years||10.50% - 17.00%||Upto 2% + GST|
|Muthoot Finance||INR 1,500 onwards||Upto 1 year||12.00% - 27.00%||Upto 1% + GST|
|YES BANK||INR 25,100 onwards||Upto 3 years||9.00% - 15.00%||0.75% + GST|
|Canara Bank||INR 10,000 to INR 20 lakhs||Upto 1 year||7.65%||Upto 1% + GST|
RBI Raises the LTV Ratio on Gold Loans to 90% Till March 31, 2021
On August 6, 2020, Reserve Bank of India (RBI) announced that from now on, you can take a Gold Loan upto 90% of the overall value of Gold Ornaments and Jewellery from banks. This new Loan-to-value (LTV) ratio will be effective until March 31, 2021. Earlier, this LTV Ratio was fixed at a maximum of 75% for gold loans given for non-agricultural purposes. This new guideline from the RBI will certainly help the borrowers get more gold loan amounts to deal with the crisis caused to them by the COVID-19 pandemic. You need to remember that this guideline regarding the updated LTV will only apply to gold loans taken from banks.
What are the fees and charges applicable on loan against gold?
Just like any other loan, there is a processing fee on gold loan as well. This fee varies from one lender to another but is usually a maximum of 2% of the loan amount.
List of Banks Offering Gold Loan in India October 2023
Below are the features available at some of the best loan against gold lenders in India. You may go through the details for gold loan interest rate comparison.
SBI Gold Loan
- Loan amount ranging from INR 20,000 to INR 20 lakhs
- Up to 3 years
- SBI gold loan interest rate starting from 7.50% per annum
- Processing fee on the loan is 0.50% of the loan amount + GST
ICICI Bank Gold Loan
- The loan amount you can get for ICICI gold loan ranges from INR 10,000 to INR 15 lakh for the tenure upto 12 months.
- ICICI Bank gold loan interest rate starts from 10.00% - 19.76% per annum
- The processing fee on the loan is 1% of the loan amount + GST
Manappuram Gold Loan
- The maximum loan amount you can get for Manappuram gold loan is INR 1.5 crores
- You can take the loan for 12 months
- The interest rate for Manappuram gold loan ranges from 12.00% - 29.00% per annum
Axis Bank Gold Loan
- The loan amount you can get for Axis Bank gold loan ranges from INR 25,000 to INR 20 lakhs
- The maximum tenure for Axis gold loan is 3 years
- Axis bank gold loan interest rate ranges from 13.00% per annum
- The processing fee applicable on the loan is 1% of the loan amount + GST
Kotak Mahindra Bank Gold Loan
- You can get a gold loan for the loan amount ranging from INR 25,000 to INR 25 lakhs
- The maximum tenure for Kotak Bank gold loan is 3 years
- Kotak Bank gold loan interest rate ranges from 10.50% - 17.00% per annum
- The processing fee for the loan is up to 2% of the loan amount + GST
Muthoot Finance Gold Loan
- The loan amount for Muthoot gold loan starts from INR 1,500 onwards
- You can take the loan for a maximum of 1 year
- Gold loan interest rates at Muthoot Finance ranges from 12.00% - 27.00%
- The processing fee for the loan is up to 1% of the loan amount + GST
YES Bank Gold Loan
- Yes Bank gold loan amount starts from INR 25,100 onwards
- The maximum tenure available for the loan is 3 years
- YES Bank gold loan interest rates ranges from 9.00% - 15.00% per annum
- Processing fee is 0.75% of the loan amount + GST
Canara Bank Gold Loan
- The loan amount you can get for Canara Bank gold loan ranges from INR 10,000 to INR 20 lakhs
- Canara Bank gold loan interest rate starts from 7.65% per annum.
- The loan can be taken for a maximum of 1 year.
- The processing fee applicable on the loan is up to 1% of the loan amount + GST.
How to apply for a gold loan online?
Just like any other loan, a gold loan can also be availed both online and offline. Even though the offline procedure is usually preferred by most of the people, lenders are giving loan against gold online option as well. You only need to visit the official website of the lender or compare online and fill in the basic details. The information which you need to mention in the online application form is as follows:
- Full name
- Email ID
- Mobile Number
- City Pincode
Once you submit that form, the representative will get back to you. After the verification of gold submitted by you and also your personal details, your application will be processed further.
Who are eligible to get a gold loan?
Anyone who owns gold ornaments can avail the loan. However, only people above the age of 18 years are eligible for it. The eligible person can avail the loan by submitting a piece of gold jewellery (within a karat range of 18K to 24K) at the branch.
What are the documents required?
Since this is a secured loan against a gold item, the documentation does not include any income proof. So, only basic KYC documents are required which are mentioned here:
- Two passport size photograph
- ID Proof such as Driving License/PAN Card/Form 60/61/Passport Copy/Voter ID Card/Aadhaar Card/Ration Card.
- Address Proof such as Driving License/Voter ID Card/Ration Card/Aadhaar Card/Passport Copy/registered lease agreement with not older than 3 months utility bills in the name of landlord (any one)
How is the loan amount calculated?
The amount of loan is decided on the basis of the kind of security that is deposited. The maximum loan amount you can get against the gold item depends on the weight and existing market value of gold at that particular time and date. Other factors such as the form of gold and repayment capacity of the borrower are also taken into consideration. Also, coins and bars offer higher value than a piece of jewellery and usually up to 80% of the value of gold is offered after valuation. With this feature, a gold loan not only becomes easily accessible but also a high loan to value ratio option.
What is the process of depositing gold?
Once the gold is verified by the finance provider and application form is properly filled, a gold agreement is signed. After that, the gold is submitted to the lender and loan is disbursed.
How much time does it take to get disbursal?
As mentioned above, after completion of the documentation, loan is disbursed instantly. This is the fastest way of getting a loan otherwise all other loans take at least a day for disbursal.
How can you repay your gold loan online?
Almost all lenders offer online repayment option. The online gold loan repayment procedure is quite simple. You can use your login ID and password given at the time of online application to login to payment desk and follow the procedure of online repayment. There are different modes of payments such as cash, EMI, cheque and DD.
What are the chances of facing rejection?
The loan is processed for disbursal only after complete verification of the gold submitted. If it is found that the gold item is fake or stolen or without bill or the documents are not original, in these cases, the chances of rejection is higher. Otherwise, since the loan is approved on the basis of gold quality and basic KYC documents, there are not much chances of getting rejected.
Is a good CIBIL score helpful in getting Gold Loan?
Having a good credit history is always helpful in getting lower rates on loans. For gold loans as well, you can get an advantage of good CIBIL score as you get the chance to negotiate on rates. However, most of the people who avail this loan are even non-working so having no credit history does not affect your eligibility to get the loan.
How to boost your CIBIL Score with Gold Loan?
In case you are a defaulter, a loan against gold may help you boost your credit score. This is possible because a gold loan is a secured loan which helps in strengthening your credit score as compared to unsecured personal loan. It can be availed without income proof. All you need to submit is KYC documents and the gold item. So, you can take a small loan amount and repay it regularly to boost your CIBIL score over a period of time.
How is a gold loan better than a personal loan?
There are a lot of advantages of gold loan which make it better than unsecured personal loans. The list of benefits is here:
- A gold loan is a secured loan and it helps to boost up your credit score which is not available in an unsecured personal loan.
- Gold purchase is the ideal asset allocation strategy amongst Indians and a loan against gold is the best way to use its maximum potential as there is high LTV ratio up to 80%.
- It is disbursed within 60 minutes at most of the lenders whereas a personal loan is disbursed within 2-5 working days in general.
- The interest rate on a gold loan starts from 9.15% per annum as compared to personal loan starting with 11% per annum.
- There is no income proof required to get a loan against gold unlike personal loan where it is the most important document
- Unlike a personal loan, there is not much relevance of CIBIL score in a gold loan so much so that even CIBIL defaulters can get a gold loan.
- You get flexible loan renewable options on a gold loan.
- The tenure for a gold loan starts with 3 months whereas for a personal loan it is 12 months.
- It helps in boosting your credit score over a period of time.