Max Loan Rs 10,00,00,000
Min Interest Rate 6.99%
Max Tenure 60 months
Min Processing Cost 0.5% + GST
Avg Sanction Time 3 days
Loan Per Gram: Rs 3,650*

*For 999 carat Gold. Updated as of 15th July 2021

Gold Loans in India

Gold is the most cashable asset that you can use to meet financial requirements. Compared to a personal loan, a Gold Loan has an affordable interest rate and easy repayment tenure.

It is recommended that you compare best gold loan products available in the market before finalizing on the best one.

Some of the popular ones in the market includes State Bank of India, Muthoot Finance, Mannapuram Finance, and commercial banks such as HDFC Bank and ICICI Bank. Many co-operative banks, Gramine Banks, MFIs, and District commercial banks also offer gold loans.

How to get a Gold Loan

You can get a Gold Loan in 5 easy steps. Here's how...
  • Find out your capital requirements and repayment capabilities.
  • Approach local commercial bank or a reputed NBFC.
  • Check interest & EMI schedule. Enquire about lender’s vault and valuation process.
  • Share relevant documents to the lender.
  • Submit Gold to valuer and take accurate receipt.

Banks and lenders normally ask borrowers to file a simple form and complete the documentation process. There are chances that your lender may ask check with a credit bureau. Borrowers with a score of 750 are a prized lot for any lender and walk away with cool offers. But, don't feel dejected if your Credit Score is low. That, because lenders mostly approve requests. You will need to share some of the documents below to get started.

  • 2 Passport size photographs
  • Aadhar Card
  • PAN card
  • Passport
  • Voter ID Card
  • Electricity Bill / Telecom Bill
  • Rent Agreement
  • Driving Licence
It could take anywhere from 2 hours to a week for the bank to collect Gold and credit funds into a borrowers account.
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Pros & Cons of Gold Loan

You should be well informed of the pros and cons of a Gold loan prior to applying for one.

Advantages:

  1. Low Interest Rate
  2. no need of income proof
  3. credit score is seldom required
  4. quick processing - a gold loan takes anywhere from 4 hours to a maximum of 7 days to process.
  5. Negligible pre-payment penalties (some banks ask borrowers to pay 1 percent charge)

Disadvantages or Risks of Gold Loans:

  1. You may forfeit Gold if you don't pay your Loan on time.
  2. Low Loan To Gold Value Ratio
  3. Negligible amount for 18K or jewellery.
  4. Lenders valuator will does not include melting, making and refining charges.
  5. Rates for non BIS hallmarked jewellery are very low.

Frequently Asked Questions:

Gold Loan

  • How much time does it take to get Gold Loan?

    It could take anywhere from one hour to 7 working days to get your loan amount credited to your bank account. The large scheduled commercial banks have become quick and so have Gold loan companies such as Muthoot and Mannapuram.

  • When in doubt always ask the lender to double-check on the valuation report. If the lender's valuation report is different from your Gold bill it is advised that you pay a visit to the local jeweller from whom you purchased the ornament.

  • A discount of one percent does not appear like a big change in your EMI. But, it will bring down your total interest outgo. Some lenders may charge a lower interest rate for a higher processing fees. Processing fees is only one time and is exclusive of GST in most cases.

  • Gold loan rules are governed by the Reserve Bank. You can share your complaint with the respective RBI ombudsman.

  • Gold loans can be used for a number of purposes besides just farming. Several DCCBs and Regional Rural Banks offer additional benefits on top of Gold loans sought by farmers. Some of the sops include zero processing fees as well as interest waivers.

  • The nearest bank is often the best lender. Of course the most important factor should be the vault quality and the lender's reputation. Keeping that in mind, State Bank of India, Muthoot FinCorp, Mannapuram Finance, ICICI Bank, HDFC Bank are some very reputed names to seek a gold loan from.

News | Opinion | Analysis

Gold Loans

Regulatory

RBI allows jewellers to repay gold loans in physical form

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Is India's love for Gold dented?

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Thought-Pot

The Basics of Valuation

Interest Rate, Tenure & Schemes

Gold Loan Providers in India

LenderInterestTenure (mos)Max Loan
ICICI Bank9% to 19.76%6 to 121,00,00,000
Mannapuram Finance12% to 29%1 to 122,00,00,000
Muthoot Finance12% to 27%1 to 122,00,00,000
Bank of Baroda9.1% to 9.25%6 to 1225,00,000
State Bank of India7.3% to 7.5%6 to 3650,00,000
HDFC Bank8.95% to 17.02%3 to 2450,00,000
Federal Bank8.5% to 12.5%6 to 3625,00,000
Axis Bank13.5% to 16.95%3 to 3625,00,000
Punjab National Bank7.95% to 9.5%3 to 6025,00,000
Kotak Mahindra Bank10% to 17%3 to 4825,00,000
Central Bank7% to 9.5%3 to 6025,00,000
South Indian Bank12.2% to 12.45%3 to 1210,00,00,000
Indian Overseas Bank7.05% to 8.15%1 to 3625,00,000
Kerala Gramin Bank6.99% to 11.99%3 to 1225,00,000
Canara Bank7.35% to 12.95%3 to 1225,00,000

Updated as of 15th July 2021

Tips while taking a Gold Loan:

If you are approaching a bank for a Gold Loan, it is advisable that you understand the following five important tips.

1. Understand Different Types of Gold Loans: The word Gold Loan looks pretty straight-forward but has several types of it. From lenders who offer funds for 30 days to the ones for up to five years there's a lot of difference. For instance, there's gold loans for real estate builders and one for farmers. Then, there are gold loans for women borrowers as well. You should find the purpose of your borrowing. Doing so could easily help you in getting sops on your loan. For example PSU banks generally offer lower interest rate gold agri loans to farmers.

2. Processing Fees: Pay close attention to fees such as stamp duty, assaying fees, valuation cost, documentation charges, credit disbursal cost, collection charges etc. These charges will be pointed in your bank's terms and conditions sheet. Banks also club insurance packages as a complimentary add-on. Although these are complimentary in nature, the minute terms and conditions do not read these instructions clearly. If your lender is offering a free insurance, do ask him the premium for it. Remember, the concept of "free dinner" does not exist in the world of finance.

3. The Feeling of Lower Interest Rates: Lower interest rates sounds awesome. Doesn't it? Who wouldn't like lower interest rates! But don't just consider interest rate in your calculation, also consider other factors such as how the repayments shall be done or availability for top-ups or easier repayment options should you have genuine problems in repaying. Many lenders offer a cheaper interest rate but the ways to repay the EMI are limited. In such cases if a cheque bounces, the agency collects collection charges, dishonor charges, late payment fees plus a fixed percentage on the overdue amount from borrowers. Additionally, an 18 percent GST on the late payment fee may also levied by the bank. A trusted bank is one which explains different types of charges. Also, a good borrower is one who keeps a note of this information while honoring their EMIs on time.

4. Gold Loan Vs OverDraft: Getting a Gold Loan with an OverDraft sounds alluring but honestly it may not be your need. An overdraft facility is helpful to businessmen and others who have fluctuating needs. With a Gold Loan OD, the bank basically fixes a credit ceiling for its borrowers. The borrower can use this like a prepaid card. Ofcourse, the borrower has to honor the EMI commitments. A gold loan with an OD facility means that a part of the Gold value is given to the borrower as funds and the other part can be used by the borrower as a credit card. In this concept, the borrower has to repay the instalment agreed for the total loan and not just the interest on the credit card alone. For example, if the total fund borrowed is Rs 50,000 the bank credits Rs 35,000 into the borrowers account and the remaining 15,000 as credit facility. If your requirement is for the short-term you may find the Gold OD as a trap. That, considering the interest rates on an Over-draft facility are on the higher side despite the bank having a highly secured collateral like Gold in its custody.

5. Ask for discounts: Many novice borrowers feel that the bank is doing a favour by giving them a loan. There are many charges which the bank can discount on its discretion. These includes collection charges, maximum loan amount, interest rate, and even prepayment charges and foreclosure charges. If you are applying to the bank directly the bank may even waive off some part of the processing fees. When it comes to a Gold Loan, banks often raise the objection of low Credit Scores for discounts but you should remember that Gold loan is a highly secured loan given the collateral with the bank. Of course, this does not mean borrowers can refuse to repay. Remember the Loan-to-value is just 70 percent which means you are losing significant value by not honoring your loan.

You should also ask the bank for a bullet break-up on the EMIs. Once you have completed the term of the loan ask for a NOC and no due certificate for having paid on time.

Disclaimer: Sify.com & its associates source this market information from several sources including banks and their branches. Readers are requested to confirm on the exact rates with the banks as this information is likely to change. For any feedback feel free to write to editorial@sifycorp.com.