Best Gold Loan Interest Rates May 2019

Gold Loan is offered by pledging gold as a security and is generally offered for short durations. You do not require a good CIBIL score or income proof to avail a gold loan.

Banks Which Offer Gold Loans:

Gold loans in India are offered by banks and NBFCs at a competitive rate of interest. There are several gold loan schemes offered by banks and NBFCs and customers can avail them as per financial requirements. Listed below are the banks and NBFCs that offer the best interest rate on gold loans:

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Best Gold Loan Interest Rates May 2019

What are the Minimum and Maximum Loan Amounts?

Banks offering gold loans sanction the amount based on the amount of gold pledged by the customer. The gold is weighed and its market value is calculated based on the current gold rates. The amount is sanctioned after the verification of the purity of the gold/gold ornaments. You can avail a minimum gold loan of Rs 1,000 and the maximum amount of loan sanctioned by banks is Rs 1.5 Crore. These are short term secured loans and some banks offer facilities like no prepayment charges or no minimum lock-in period. 

SEE ALSO: Gold Loan Interest Rates

What is the Gold Loan Tenure Option?

Gold loan is availed to meet emergency funding and is availed for a short tenure. The term of the loan generally ranges from 1 month to a maximum of 3 years. The repayment tenure of the gold loan is fixed based on the amount sanctioned.

Documents to Be Submitted:

Gold loan is a form of secured loan as the gold is pledged as collateral for the money borrowed. Unlike other loans, gold loans do not require extensive documentation. Listed below are some of the important documents an individual must furnish to apply for a gold loan:

• Identity proof: Passport, PAN card, Aadhaar Card, Voter ID.
• Proof of address: Aadhaar Card, Voter ID, driving license.
• Residential proof: Utility bills, landline bill, rental agreement.
• Passport sized photograph.

Additional Fees:

The rate of interest charged by the bank depends on the tenure and the amount borrowed. Banks charge an interest rate of 10.5% to 16% a year on gold loans. There are some additional fees that must be incurred by the borrower on gold loans. Most of the banks charge a processing fee of 1-2% on the sanctioned gold loan.

Gold Loan Prepayment or Foreclosure:

Gold loans are short-term secured loans. Generally, borrowers do not want to close gold loans early as they are availed for a short time period. However, if you want to prepay gold loan, you may do so by paying a penalty. Gold Loans can be closed at once by paying a lump sum which entails interest along with the principal amount. Terms differ across banks. While most of the banks charge foreclosure fees or have lock-in periods, some banks do not charge such fees or don’t have any lock-in. Before applying for a gold loan, try and compare the rates offered by different banks and their terms and conditions to get the best deal.

SEE ALSO: When Should You Go For A Gold Loan?

How to Repay the Gold Loan Amount?

Banks sanctioning gold loans offer the facility of flexible repayment. Borrowers can choose to pay only the interest during the gold loan tenure and must repay the entire principal at once at maturity. Gold loans are availed for various purposes like funding education, emergency expenses, or to meet personal or family obligations and so on.

The flexible repayment option saves customers from the hassles of monthly installments. The interest must be paid as per the terms of the gold loan. Payments can be made via banking facilities like cheque or demand draft or even by cash. Some banks also provide the facility of online banking, where the interest and the principal can easily be transferred to the respective bank accounts.

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