Are you considering taking out a gold loan? Compare the lowest interest rates and EMIs for a Rs 5-lakh loan
Lending against gold or lending gold is a popular way of borrowing money from financial institutions. When you are short on funds, a gold loan is the easiest way to get cash to meet your immediate needs.
Gold is considered one of the most valuable and secure investment assets. It holds both financial and religious importance in India. Gold is movable property that can be used as collateral to arrange funds to finance your needs, such as education, medical emergencies, marriage, etc.
Lending against gold or lending gold is a popular way of borrowing money from financial institutions. When you are short on funds, a gold loan is the easiest way to get cash to meet your immediate needs. Compared to other types of loans, gold loans require less documentation and disbursement can take place immediately.
Generally, all lenders, including banks and other financial institutions, offer loans against your gold. If your gold is pure and meets other criteria, then financing is readily available as it is less risky for lenders.
However, you should compare interest rates, tenure and other details before pledging your gold as collateral. It is also advisable to consider other fees and charges that might be applicable on a gold loan – processing fees, late payment fees/penalties for non-payment of interest, appraisal fees, etc., according to BankBazaar.
A reputable institution will keep your gold safe until you have fully repaid your loan. You can benefit from funds up to 75% of the value of the promised gold, but it can be lower or higher depending on the purity of your ornaments etc. The higher the value of your gold, the higher the loan amount will be.
It is essential to check the current price of gold and assess how much you need versus what you can get by pledging your gold. The term of your gold loan can vary from a minimum of 3 months to a maximum of 48 months. You can calculate the interest base of the term you choose for your gold loan.
Many lenders offer the possibility of reducing the prevailing interest rate on the loan against gold if the borrower regularly repays the interest. This discount can be from 1% to 2% on the initial interest rate.
Nowadays, public sector banks and private banks as well as non-banking financial companies (NBFC) offer gold loans to their potential customers. However, it is good practice to do your due diligence and avoid delays and defaults on refunds. If you are unable to repay the gold loan, lenders may sell your pledged gold to recover their outstanding amount.
The table below provides the indicative EMIs for gold loans from different lenders for a loan of Rs 5 lakh taken for a period of 2 years.
Indicative Interest Rate and EMI on Rs 5 Lakh Gold Loan
Compiled by BankBazaar.com
Note: Interest rates on gold loans for all listed public-pvt banks (BSE) and selected NBFCs considered for data compilation; Banks whose data is not available on their website are not taken into account. Data collected from respective bank’s website as of January 11, 2022. Banks are listed in ascending order on the basis of interest rate, i.e. the bank/NBFC offering the lowest interest rate. lowest on the gold loan (for different loan amounts) is placed at the top and highest at the bottom. The lowest rate offered by the banks/NBFC is taken into account in the table (regardless of the loan amount). The EMI is calculated on the basis of the interest rate mentioned in the table for a loan of Rs 5 lakh with a tenor of 2 years (processing fees and the like are assumed to be zero for the calculation of the EMI); *APR for Qtr JUL to SEP 21; ^ For the Covid Warrior; **without discount
Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest Biz news and updates.