In India, gold loans are a common choice for people who require quick and simple access to capital. These loans are provided by several banks and financial organisations and use gold as collateral. Selecting the ideal bank is crucial if you’re thinking about taking out a gold loan to receive the greatest interest rates, repayment options, and customer support. You will learn Which Bank is Best for Gold Loan from this article.
Which Bank is Best for Gold Loan? Overview
| Interest Rate | 8% p.a. onwards |
| Loan Amount | Up to Rs.1.5 crore |
| Loan Tenure | 3 months onwards |
| Processing Fee | 0% – 2% of the loan amount + GST |
Features of Gold Loans in India
- Gold Purity: Gold with a purity of 22 carats or more is usually eligible for gold loans.
- Loan tenure: For gold loans, the loan terms normally vary from three months to four years.
- Repayment: Gold loans can be paid back in full after the loan term, or in monthly installments.
- Loan amount: Depending on the value of the gold pledged, loans for up to Rs. 50 lakh can be obtained through gold.
- Prepayment: The majority of banks and NBFCs don’t charge penalties to borrowers who pay back their gold loans early.
- Interest rates: Generally speaking, interest rates on gold loans are lower than those on other loan categories like credit cards or personal loans.
- Quick and easy processing: After guaranteeing the gold, borrowers can usually receive their loan amount in a matter of hours or days thanks to the swift and simple processing of gold loans.
- No credit history required: Gold loans are an excellent choice for borrowers with poor credit or no credit history because they do not require borrowers to have a good credit history.
- Flexible repayment options: Borrowers can opt for either a lump sum repayment at the end of the loan tenure or monthly installments with gold loans because they offer flexible repayment options.
- Anytime liquidity: Gold loans give borrowers instant access to cash whenever they need it because they can be taken out and repaid at any time.
Factors Affecting Gold Loan Interest Rates
- Price of gold in the market: The value of the gold coins or ornaments you are pledging will be high if the market price of gold is high. Since there is less risk involved, lenders will give you a lower interest rate in these situations. Additionally, if you are unable to make the required monthly installments (EMIs), the lender can easily collect the outstanding balance by selling or bidding on the gold ornaments.
- Inflation: People tend to hoard more gold when there is a high rate of inflation because money loses value. Gold serves as a buffer against inflation, particularly when it lasts for an extended amount of time. This drives up the price of gold, and at those times, lenders may offer you a lower interest rate if you want to get a gold loan.
- Relationship with the bank: The majority of lenders only provide gold loans to their current clients, but occasionally, those without a bank account can also apply for gold loans. Nonetheless, current bank and lending institution clients are usually in a better position to bargain for a lower interest rate.
Gold Loan Interest Rates of Top Banks & NBFCs
| S.No. | Bank | Interest Rates | Loan Amount |
| 1 | State Bank of India | 7.50% p.a. onwards | Rs.20,000 to Rs.50 lakh |
| 2 | HDFC Bank | 7.60% to 17.05% р.а. | Rs.10,000 onwards |
| 3 | Kotak Mahindra Bank | 8.00% to 17.00% p.a. | Rs.20,000 to Rs.1.5 crore |
| 4 | Central Bank of India | 8.10% to 8.20% p.a | Rs.1,000 onwards |
| 5 | Indian Bank | Around 7.00% | Rs.1,000 onwards |
| 6 | ICICI Bank | 8.99% to 17.99% р.а. | Rs.10,000 onwards |
| 7 | Axis Bank | 11.99% p.a. onwards | Rs.25,001 to Rs.25 lakh |
| 8 | Canara Bank | 9.60% p.a. | Rs.5,000 to Rs.35 lakh |
| 9 | Bank of Baroda | 9.15% p.a. onwards | Up to Rs.50 lakh |
| 10 | Punjab National Bank | 8.10% to 9.25% р.а. | Rs.25,000 to Rs.25 lakh |
FAQ’s of Which Bank is Best for Gold Loan
Q1. Which bank is best for obtaining a gold loan?
Ans. The ideal bank for a gold loan may differ based on your preferences, location, and loan requirements. HDFC Bank, State Bank of India (SBI), ICICI Bank, and Muthoot Finance are a few respectable banks with a solid reputation for providing gold loans.
Q2. Will the interest rate on my gold loan be influenced by my credit score?
Ans. No, when you apply for a gold loan, lenders won’t consider your credit score. You can apply for a gold loan if you are at least eighteen years old and have proof of ownership documentation.
Q3. I work as a farmer. Are the interest rates on the gold loans discounted for me?
Ans. Indeed. Farmers who want to take out gold loans to pay for their agricultural infrastructure or other farming-related expenses can receive a rebate on the interest rates because agriculture is classified as a priority sector. They can obtain gold loans at interest rates as low as 8% because the rebate can vary from 1% to 2%.
Q4. What qualifications are needed to apply for a gold loan?
Ans. A gold loan is available to Indian nationals who are self-employed, farmers, business owners, or salaried employees and who are between the ages of 21 and 60. Housewives and retirees may also be eligible for gold loans from certain lenders.