Gold loans provide a quick and convenient way to access funds, especially during financial emergencies. By using your gold jewellery or ornaments as collateral, you can borrow money from a financial institution like a bank or a non-banking financial company (NBFC). Since this is a secured loan, the lender holds the pledged gold as security until you repay the loan along with any applicable interest. The valuation of gold involves appraising the purity and weight of the gold ornaments. Lenders use certified tools and techniques to ensure accuracy in the presence of the borrower to maintain transparency. The valuation helps in determining the loan amount, often limited by LTV ratios. You would be asked to furnish identity proof (like Aadhaar or PAN), address proof, and sometimes income proof, depending on the loan size and institution.
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Typically, borrowers can receive a loan amount that is around 60-75% of the gold’s market value. The loan amount depends on factors such as the gold’s value and purity, the borrower’s income, credit score, and repayment history. These loans often have a shorter processing time compared to other types of loans, making them suitable for urgent situations.
Since gold loans are secured, they usually have lower interest rates compared to unsecured loans like personal loans. The funds can be used for various purposes, such as medical bills, education, business investments, or other financial needs. If the borrower fails to repay the loan, the lender can sell the gold to recover the outstanding amount.
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Before taking a gold loan, it’s crucial to assess your financial situation and repayment capability. Failing to repay may lead to the loss of your gold assets. Ensure you understand the loan terms and conditions and explore alternatives before deciding. Always choose a reputable lender or bank to safeguard your gold. Additionally, compare interest rates, check eligibility criteria, and verify the lender’s credibility before proceeding. Here are ten banks offering the lowest gold loan interest rates.
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| Gold Loan Interest Rates for Rs 3 Lakh for 2 years period | ||
| Bank Name | Interest Rate | EMI |
| Central Bank | 8.40% | ₹ 13,622 |
| Indian Bank | 8.80% | ₹ 13,677 |
| Indian Overseas Bank | 8.85% | ₹ 13,684 |
| Bank of Baroda | 9.15% | ₹ 13,726 |
| Punjab National Bank | 12.50% | ₹ 14,192 |
| Union Bank | 9.95% | ₹ 13,836 |
| Bank of Maharashtra | 9.30% | ₹ 13,774 |
| State Bank of India | 10.20% | ₹ 13,871 |
| Canara Bank | 9.00% | ₹ 13,705 |
| Bank of India | 8.80% | ₹ 13,677 |
EMI on loan of Rs. 3 lakh over 2 years for term loans on EMI only. Interest rates in some institutions may vary based on a borrower’s profile and gold quality. Compiled by BankBazaar.com. Updated on Oct 3, 2024.
