Gold loans have always been a popular option in India to get help during times of financial stress. Loans secured by gold also have lower rates of interest than unsecured ones.
However, with so many banks and non-banking financial companies (NBFCs) offering gold loans, it can be challenging to choose the best option. Apart from comparing the rates of interest, lenders may charge you other fees for your gold loan, such as processing fees, equated monthly instalment (EMI) bounce charges, and late payments fees, among other. Some of them can even charge prepayment charges.
Therefore, one must carefully look for these fees when looking for a gold loan.
Here, we look at six banks offering their cheapest gold loans in India.
Gold Loan Rates
HDFC Bank is offering gold loans at competitive interest rates, starting from 8 per cent per annum. The processing fees are up to 1 per cent of the loan amount sanctioned, and the prepayment charges are 1 per cent plus taxes.
Canara Bank, is offering goals loans under its ‘Swarna Loan’ scheme at a rate of interest of 9.60 per cent per annum. The bank provides a repayment period of up to 12 months, with a maximum loan amount of Rs 35 lakh.
Indian Overseas Bank is offering gold loans at a rate of interest of 7.25 per cent per annum to meet domestic needs of women customers. The maximum limit per borrower is Rs. 5 lakh. The repayment period is up to 12 months.
Federal Bank is providing gold loans at a rate of interest of 8.89 per cent per annum. The bank is also offering doorstep service for customers who wish to avail of gold loans.
State Bank of India is offering a three months bullet repayment gold loan at a rate of interest of 8.65 per cent. The processing fees is Rs. 200 plus GST. The maximum loan amount at SBI is Rs. 50 lakh.
Punjab National Bank is offering gold loans at a rate of interest of 9.25 per cent per annum. The maximum amount available is Rs. 25 lakh.
While these banks offer some of the cheapest gold loan interest rates in India, it is essential to compare the interest rates, repayment periods, and loan amount offered by different banks before selecting the best option.
Defaulting on payments can result in the loss of the pledged gold. So, borrowers should ensure that they understand the terms and conditions of the loan before availing of it.
Further, the weight of gold is the primary determinant of the cost of a gold loan, and banks usually finance between 75 and 90 per cent of the metal’s value. The loan’s EMI payments will vary based on the duration, which can typically range from three months to three years.