Gold Loan Interest Rates Mar 2021

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.
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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.

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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.