Gold loans are loans that are issued in exchange for gold assets. In this, the applicant deposits their self owned gold ornaments or articles to the bank as collateral. This makes Gold Loans the secured kind of loan. Secured Loans are when the borrower has to put an asset as a sense of security or collateral. It is the most preferred type of loan. In this article, we are going to discuss in detail, the features, eligibility criteria required and which bank gold loan interest rate is low in this time and age.
People these days, when require a sum of money for personal use or sometimes on an urgent basis, first run towards the bank requesting a loan. A loan is a financial scheme wherein an applicant applies to a certain lender, requesting an amount under the reasons of personal needs or emergency purposes. They may be named as a home loan, car loan, personal loan or even gold loan. Each of these has its own set of benefits and features but in this article, we are going to be focusing on Gold Loans.
Features of Gold Loan
Before you make a firm decision on what type of loan you should consider, understand the features provided by Gold Loan in detail.
Out of all the loans that are available a Gold loan interest rate is the lowest. Gold loans mainly depend on how much the collateral is worth. Thus if the borrower has such worthy assets they can lower their gold loan interest rate, accordingly. The average or normal gold loan interest rate starts from 7% and goes up to 13%. Others, such as personal loans start from 15%. The applicant also has an advantage if they are well connected and have been acquainted with the lender in the past.
Gold loan processing is undeniably the fastest and quickest, compared to all other loans. Since it can be applied through the online websites of the respective lender, there is no need to wait in line. The other reason why it is quick and fast is the lack of too many documents requirement. The approval of the loan isn’t a hassle as well if the lender is convinced about your gold articles and your other provided documents. You will receive your loan amount in a couple of days or hours.
Gold loans are termed as “ATL”, which translates to Anytime Liquidity. Anytime liquidity means that you can easily pledge your gold articles. In this process, you might need a minimum of documents or other formalities.
No credit score is required
Personal loans, require you to have a certain credit score. It is also known as the CIBIL score. Gold loans do not require this. The lender does not check the applicant’s credit score. They simply check the quality of the gold articles or ornaments.
Pro tip: Credit score is created by the discipline of the applicant on how they repaid any previous loan.
Ornaments are kept safe
Since you, the borrower has put your gold articles with the lender, it is fully their responsibility. They will provide adequate security for your gold assets. Your deposited gold assets remain with the lender until the end of your loan tenure.
Eligibility criteria for a gold loan
Now let us have a look at what are the factors that make an applicant eligible for a gold loan.
- You must be an Indian citizen.
- Age is an important factor. Your age should at least be somewhere between 18 to 70 years.
- The banks offer gold loans to self-employed, salaried employees and even to farmers or traders.
- The deposited gold asset should be between 18 to 24 karats.
Which bank is offering a gold loan at the lowest interest rate?
Given below is a table that shows the names of different banks, providing gold loans at differential interest rates.
Name of the Bank
Rate of interest
|SBI bank||7.00% p.a. onwards|
|Canara bank||7.35% p.a. onwards|
|Kotak Mahindra bank||10.00% to 17% p.a.|
|HDFC bank||11% to 16% p.a.|
|Axis bank||13.50% to 16.95% p.a.|
SBI bank significantly provides you with the lowest range of rate of interest. You can avail of such a loan between 20,000 to 50 Lakhs. The bank provides you with a flexible tenure that is comfortable for you. It can range anywhere from 12 months to 3 years. You can repay the bank using the EMI method. The bank charges a processing fee of 0.25% of the loan amount issued. If the borrower has a sufficient amount of gold assets, taking up a gold loan can be extremely beneficial. Also, gold loans are the most useful if you need money on an urgent basis.