Gold Loan Interest Rates

Based on a comparison of gold loan rates of all banks, HDFC Bank, Yes Bank, ICICI Bank, Andhra Bank, IndusInd Bank give the lowest gold loan interest rates in the range of 9.90% to 11.5%. Similarly, based on a comparison of processing fees, Federal Bank, Andhra Bank are the best banks to take loan against gold as they charge the lowest processing fees of Nil Charges.

Interest rates are charged on the borrowed loan amount for the loan tenure. Lowest interest rate on gold loan is 9.90%. Interest rate to get loan against gold depends on multiple factors -

Loan amount – This is the amount borrowed by the borrower from a bank. Generally, interest rate are high for smaller loan amount and vice-versa.

Loan to Value Ratios - Banks charge higher interest on gold loan with high LTV ratio. Hence, higher the loan to value of jewellery, higher the interest rate and vice versa.

Relationship with the Bank - Banks offer lower rate of interest on jewel loan for their existing account holders with a quick turnaround.

Gold loan interest rates vary across lenders to lenders. However, certain factors affect gold loan interest rates at large. These are listed as follows:

• Inflation: Gold loan interest rate is highly affected by inflation. This is because due to inflation, the price of currency falls, and people prefer holding money in the form of gold. Thus, gold prices are higher if inflation is prolonged over a long time.
• Gold price: In case of high gold prices in the market, the lender will offer a lower interest rate on a gold loan, as the risk of repayment involved is low in this case.
• Lender-Borrower’s relationship: At times, gold loans are offered at an affordable interest rate to the existing customers of the bank. Thereby, if you are associated with the lender in any way through a savings account, an FD, a loan account or any other form, the gold loan interest rate offered to you might be lower from this particular lender. Existing customers can also negotiate with their bank for an affordable deal.
• Demand and supply of gold: Gold holds a special place in the Indian household, due to the fact that it has cultural and traditional connotations associated with it. Thus, it is in huge demand during festivals and wedding seasons. Thereby, an increase in gold demand leads to an increase in gold loan interest rate.

Gold Loan Schemes can be categorized based on the purpose of lending. Banks usually offer lower rate of interest for agricultural gold loans which are offered to farmers and people engaged in agriculture for meeting their farming expenses.

• Agricultural Gold Loans: These are loans extended to farmers and agriculturists against gold ornaments to provide them finance for crop production expenses and investment purpose in agriculture or allied agricultural activities. Key Features of such loans are:
  • Evidence of farming activity in form of proof land records is required
  • Written undertaking by the borrower on the purpose for which he intends to use the loan is required. Banks may also monitor the end use of such loans
  • Loans extended for agriculture are categorized under priority sector lending and are eligible for interest subvention scheme from government, which reduces the interest cost to the borrower
  • These loans are allowed generally for a maximum period of 3 years
  • Some banks also offer the option of overdraft facility on such loans
  • Interest Rate on agricultural gold loans ranges from 8.00 to 10.00 %
• Non Agricultural Gold Loans: Loans extended to all other categories of borrowers excluding farmers and agriculturists are known as non agricultural gold loans. These loans are available to all individuals including salaried, self employed professionals, businessmen, women, females, housewives, students, retired officials who own gold and want to pledge the same to get loan. The features on non agricultural gold loans have been explained under the loan schemes by repayment options.
• Bullet Repayment: This is one of the most popular repayment option offered by banks and NBFCs, where the entire principal amount is repaid at the end of the tenure. This repayment option is more prevalent for shorter tenure jewel loans of less than 6 months, as this allows the borrower to utilize all borrowed funds for the required purpose and hence, save them from the burden of repaying principal every year. Key Features of such schemes are:
  • Loan amount is repaid at the end of the tenure
  • Interest is calculated on a monthly basis, with an option to pay interest only EMIs every month, where you pay monthly interest in the form of EMIs
  • Some banks allow a lower LTV of 65% on such schemes compared to maximum LTV of 90% on other loan schemes.
• EMI Scheme: Though not very popular earlier, this scheme is increasingly being offered to jewel loan borrowers. Borrowers are required to pay monthly instalments or monthly EMIs to banks. This scheme is especially popular for longer tenure gold loan schemes with greater loan amounts. Key Features of such schemes are:
  • Lowest EMI for a ₹ 1 Lakh loan is ₹ 2,531 at the lowest gold loan interest rate of 9.90% and maximum tenure of 4 years.
  • Attractive LTVs of upto 90%
  • Banks call for 6 months PDCs for EMIs. Some banks exempt the borrowers from PDC requirement for larger ticket size loans
• Overdraft Scheme: This scheme is especially designed for businessmen and self employed who have fluctuating requirements for funds. The overdraft scheme allows the borrowers to withdraw any fund requirements or deposit any surplus in an overdraft requirements within a pre approved credit limit. Interest is charged only on the utilized portion at any given point of time. Key Feature of such schemes are:
  • Has an overdraft facility that allows deposit and withdrawal of funds during loan tenure
  • Interest expenses are minimized as it allows the borrower to deposit funds in the account when he has surplus funds
  • Available on all ticket sizes, though will be more suitable for relatively larger ticket size loans
  • Also comes with an option to renew the limit at the end of the tenure by paying processing fees

• Gold Loan Processing fees – Most banks charge minimum processing fees of ₹ 1,000 to upto 2%. Some banks may also offer lower processing fees. To get the lowest fee, gold loan interest rate comparison, offers and cashback applying online through MyLoanCare.
• Gold Loan Prepayment and foreclosure – Nobody wants to keep paying interest on a loan when you have surplus money available to repay it. When you want to repay your loan partially before time, it is called part prepayment. In case you decide to pay the entire loan amount before time, it is called foreclosure. Banks typically levy prepayment or foreclosure charges in such situations and these can range from nil to even upto 1%. So, check carefully if the low interest rate gold loan you are getting comes with high prepayment or foreclosure charges. Some loans also come with a lock-in-period and cannot be repaid before time.

• Identity proof
• Residence address and ownership proof
• Photo identity proof
• Passport size photograph

Identity Proof	PAN Card/ Aadhaar Card/ Voter’s ID Card/ Passport Copy
Address Proof	Rent agreement/ Passport/ Driving License/ Utility Bills/ Aadhaar Card/ Voter’s ID Card

✅Which bank has lowest interest rate on gold loan?

Following are the banks with lowest interest rate on gold loan:

Banks	Rate of Interest
SBI	7.50%
HDFC Bank	9.90%
Yes Bank	10.99%
ICICI Bank	10.00%
Axis Bank	13.00%

✅What are the documents required for availing Gold Loan?

The documents required for availing gold loan are:-

• Two passport size photograph
• Identity proof (PAN card/ passport/ Aadhaar card/ voter id card)
• Address proof (Electricity bill/ telephone bill/ bank statement)

✅How can I get the maximum amount of Gold Loan per gram?

For an Indian, jewelry is extremely precious and close to heart. Yet, in times of need, you might need to mortgage them to meet your urgent expenses. At such times, you need to ensure that you get the maximum gold loan per gram. It is advisable to choose the mortgaged jewelry with the help of following guidelines:

• Specially minted gold coins of banks of up to 50 grams or 22 carat gold ornaments will offer you the best rates.
• If you offer hallmarked jewelry, you will be charged a lower processing fees and hence, your cost of loan will be lower.
• Lower purity gold ornaments of 18 and 20 carat will get your lesser amount of gold loan.
• Ornaments with a lot of other stones including diamond, pearls, ruby etc might not fetch you a good loan amount as banks deduct the weight of these stones to calculate the net weight of gold and hence, the loan amount you will be eligible for can reduce depending on the net weight.
• Avoid pledging your mangal sutras, as many banks as a policy do not accept mangal sutras as a valid mortgage, with the exception of few banks who accept mangalsutras without black beads as a valid security.
• Try to use larger pieces of jewelry in place of smaller items of gold.

✅What is Jewel Loan?

The loan you avail by giving your jewelry as collateral is called Jewel loan. Lenders accept Gold jewelry or ornaments, which are of 18 carats and above. Anything below 18 carats is not accepted as security for availing loans against gold ornaments.

✅Why do I need Gold Loan?

These loans are usually taken for short term requirements. Generally, these are used for children education, marriage and other financial emergencies in the family. Usually the rate of interest on jewel loan is relatively low as it is a secured loan for banks and NBFCs.

✅What will the bank do if the gold prices fall during the tenure of Gold Loan?

The popular perception is that gold prices will never fall significantly in India. However, there have been situations, when gold prices in India have fallen rapidly. RBI allows a maximum LTV of 75% of the gold pledged. It also requires the lenders to maintain this LTV on an ongoing basis. Banks safeguard this LTV by extending EMI loans and also bullet loans where regular interest is paid every month. However, in case of sharp decline in gold prices, banks may do the following:

• The financial institution might ask for more collateral or gold to maintain the LTV
• The financial institution might request the borrower to partly pay a nominal amount which goes towards the principal
• In rare cases, if the borrower fails to make this payment, the gold can be auctioned after giving due notice period and multiple reminders to the borrower.

✅What will the bank do in case I am unable to repay my Gold Loan in time?

If any individual fails to pay his EMI, interest or principal repayment on time, he is sent a follow-up reminder by the bank. Banks also levy late payment fees as penalty on the borrower. In case of genuine borrowers, the banks may also offer an option to extend the tenure of the loan or renew the loan facility. If the borrower fails to repay the loan in 3 to 6 months, he will be treated as a default customer and the bank will send him a legal notice asking him to pay his dues, failing which the bank has the right to confiscate the jewelry kept with them and auction it, if required.

✅What is the minimum and maximum tenure of jewelry Loan?

Jewel loans are generally taken for shorter time period of less than 1 year.The tenure can range from 6 months to 36 months.

✅Do I need to open bank account to service my jewelry Loan?

Yes, you need to have at least one functional bank account in your name. It is even better if you have an account with the same bank from which you would like to get a loan.

✅Can I apply for Gold Loan jointly with my spouse?

Yes, you can apply for jewelry loan jointly with a co-applicant (either your spouse or your parents).

✅Does it affect my co-applicant if I default on Gold Loan?

Yes, if you fail to pay the loan on time then it will also affect your co-applicant as default in loan will affect his/her s CIBIL rating as well.

✅Will banks charge extra fee if I fail to repay Loan on time?

Yes, banks charge penal fee for late payment. The percent of penal charge can be over and above the existing rate of interest or above the overdue amount. Most banks charge penal fee up to 2% p.a. over and above applicable rate of interest. Some banks also charge up to 24% p.a. as penal interest over and above applicable rate of interest. So be careful while selecting particular scheme and do check the penal fee and other charges.

✅How much time will it take for me to get money?

Generally banks and NBFC's offer quick disbursement of jewel loan within an hour of walk-in at specialized loan branches. MyLoanCare can help you connect with your nearest bank branch. Play safe with your valuables and visit the branch only after your appointment is confirmed by us.

✅Who can access the customer online portal?

All existing customers get access to customer netbanking portal by login their user id and password.