Gold is a popular choice for people looking to borrow a secured loan and have capital against it. Public and private sector banks in India offer loans against gold as collateral and charge interest on the principal amount. Interest rates on gold loans vary from bank to bank depending on factors such as the weight of the jewelry, its value (ranging from 18,000 to 24,000), the repayment period, for n’ to name a few.
Meanwhile, the monthly value of gold (XAU) as of September 7 fell 3.17% to INR 4,349 per gram of 24 karat gold, according to Metals-API.com. Yet, a consumer can still get a reasonable interest rate on a gold loan from the bank for a variety of purposes, such as financing a home reconstruction project, buying a vehicle, paying unexpected bills, for emergencies or simply to improve his finances.
Forbes Advisor India has compiled a list of interest rates charged by public and private banks on gold loans in September 2022 to help you before you close the deal.
Interest rates on gold loans in September 2022
The above interest rates and gold loan details are updated as of September 7, 2022. Although we update this information regularly, the interest rate and loan details may have changed since then. the last update of the page.
Related: What are gold loans and how do they work?
Comparison of interest rates and repayment of gold loans
The interest rates that lending institutions post online only give an idea of what they are offering, not an exact rate. Remember that there is also a nominal GST charge, as well as processing fees, maintenance fees, etc. Be sure to confirm available ROI ranges and loan details with your lender before applying.
Even after submission of application and documents, lenders still have to perform KYC verification as mandated by the Reserve Bank of India (RBI) along with the creditworthiness of the borrower to repay the loan.
Once you qualify for a gold loan, financial institutions offer borrowers the option of repaying principal and interest as a lump sum, i.e. bullet payments (instead of monthly installments equivalents, or EMI) at maturity, which is usually six to 36 months.
What is the maximum value I can get on a gold loan?
One of the main determinants is its loan to value (LTV), capped by the RBI, on the basis of which a borrower will obtain a loan against the value of gold. Banks can grant a loan up to 75% of the market value of the gold ornaments pledged. For example, if the value of gold is INR 10,000 and the LTV is 75%, the maximum loan amount the client can obtain would be INR 7,500.
Frequently Asked Questions (FAQ)
How to check the value of gold?
When you lend an amount from lending institutions against gold as collateral, its weight and purity (ranging from 18,000 to 24,000) is considered a value.
Will there be KYC checks?
Will I get a gold loan if my credit rating is low?
How can I repay the loan for gold?