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.

Public Sector Banks offering Gold Loan

Public Sector Banks	Interest Rates	Repayment Schemes
SBI	7.50%	Bullet Repayment
Canara Bank	7.65% - 7.75%	Bullet Repayment
Andhra Bank	10.70%	Bullet Repayment
PNB	8.75%	EMI Scheme / Bullet Repayment / Overdraft

Private Banks offering Gold Loan

Private Sector Banks	Interest Rates	Repayment Schemes
HDFC Bank	9.90% - 17.55%	Bullet Repayment / Overdraft
Yes Bank	10.99% - 14.50%	EMI Scheme / Overdraft
ICICI Bank	10.00% - 19.76%	EMI Scheme
Federal Bank	8.50% - 11.95%	Bullet Repayment / Overdraft
Axis Bank	13.00%	EMI Scheme / Bullet Repayment
IndusInd Bank	10.00% - 16.00%	Bullet Repayment

NBFCs offering Gold Loan

Gold Loan NBFCs	Interest Rates	Repayment Schemes
Muthoot	11.99% - 11.99%	EMI Scheme / Bullet Repayment
Manappuram	12.00% - 29.00%	EMI Scheme / Bullet Repayment

• Special offers – Always check current offers and interest rates offered by various banks as banks run special schemes on periodic basis.
• Compare bank offers for various loan amount – Typically, banks offer low interest rate at higher loan amount and vice versa. Further, interest rate offered by NBFCs are typically higher as they give small loan amounts with flexible and quick service
• Type of loan taken: Generally, loan against gold taken for agricultural purposes are offered at lower interest rates. Similarly if you are planning to avail an overdraft facility against gold, you may be required to pay high interest rate.
• Loan to Value Ratio: Higher the loan to value ratio, higher is the interest rate charged. As per the latest RBI circular in a bid to provide relief to gold loan borrowers, banks can lend upto 90% of the gold as loan.
• Existing bank account holder: At times, gold loans are offered at an affordable interest rate to the existing customers of the bank. Thereby, if have an existing savings account, an FD or a loan account

Gold loan interest rates varies across lender to lender. However, the calculation of Gold loan is based on two rate types in general, as listed follows:

• Fixed-rate of interests: The rate of interest charged on the loan amount remains constant throughout the loan tenure. Thus, the Gold loan EMI also remains the same throughout the repayment schedule.
• Floating rate of interest: Gold loan rate is not fixed and remains variable. The interest rate, in this case, is linked to the external benchmarks perceived by the lender such as Repo Linked Lending Rate (RLLR) or Prime Lending Rate (PLR). Hence interest rates keeps changing with market conditions. Also, since the rate is not fixed, the EMI on Gold loan may increase or decrease abruptly.
• Purpose of Lending:Interest rate on gold loan are also 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.

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 calculation can be done differently using the below-mentioned types of gold loan interest rate calculation. These are listed as follows:

Flat Rate Method: According to the flat rate method, the gold loan rate is calculated on the original loan amount throughout the loan tenure. Thus the principal amount remains the same. For instance, even when you borrow a gold loan for 2 years of Rs 3 lakhs, you will continue paying the interest on the whole of Rs. 3 lakhs amount throughout the period of 2 years. This method is also called the fixed method of gold loan interest calculation.

Reducing rate method: The reducing balance method, as the name suggests calculates the interest rate on the outstanding gold loan amount. As per this method of interest calculation, the principal component that is paid during the monthly EMI is not chargeable for interest calculation; thus the outstanding balance reduces with time, and the interest is charged only on the remaining principal amount. As per this method, the interest amount reduces with time.

The functioning of the above-mentioned methods can be understood with the help of the following table:

Parameters	Flat Rate Method	Reducing Balance Method
Loan Amount	₹ 5 Lakh	₹ 5 Lakh
Tenure	24 months	24 months
Interest Rate	10.50% p.a.	10.50% p.a.
EMI	₹ 25,208	₹ 23,188
Total Interest Payout	₹ 1,05,000	₹ 56,512
Total Amount Paid	₹ 6,05,000	₹ 5,56,512
Savings	--	₹ 48,488

• 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 – 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.

✅Which bank is best for gold loan?

SBI is the best bank for a gold loan as it provides gold loan at lowest rates starting at 7.50%. Federal Bank, Andhra Bank are some other banks that can be considered as one of the best banks for a gold loan as it charges a nil processing on a gold loan.

✅What is the current interest rate for gold loans?

As per the current rates, SBI provides lowest gold loan rates starting at 7.50%.

✅Do lending institutions change interest rates after sanction of loan?

Yes, in case of floating rates, the interest rate on a gold loan change based on the market rates.

✅How does Repo Rate affect the interest rate of gold loans?

The repo rate is directly proportional to gold loan rates. With the cut in repo rate, the lending institutions also lowers the gold loan rates.

✅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?

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.

✅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 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.