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Gold Price in India

What is a Gold Loan?

A gold loan in India, as the term suggests, is a loan against gold. You can get such gold loan from banks and non-banking financial companies (NBFCs). In such a loan, you give your gold to banks or NBFCs as a pledge to pay back their loan amount. The gold, therefore, is kept as security or collateral. Bank-purchased gold coins and gold ornaments can be pledged. The money you get in return for that can be used to fulfill any needs. For instance, you can use it to have a lavish wedding, go on a foreign trip, repair your home, get a better education, and so much more.

Before giving your gold items to banks for loans, there are a few things you need to keep in mind.

  1. Gold needs to be at and above 20 carats only. Loans are not provided against gold bars, gold biscuits, gold wires, and other forms of this metal.

  2. The loan is kept by the bank as security until you repay the full amount with interest.

  3. All financial institutions provide a high degree of protection to your gold without any charges. All these institutions have the right to keep your gold in case you fail to pay back.

Gold Loan Features

Here are the features of Gold Loan.

  1. Loan amount from various banks and financial institutions is between Rs. 1 lakh to Rs. 1 crore.

  2. Loan disbursal is carried out typically on the day of loan approval. That means you’ll get your finds in as less as 1 hour. If you need instant cash, this is a good option.

  3. The interest rate is low, from 10.50% to 13.50%. There are special gold loans for agriculturists, women, and small businessmen at reduced interest rates.

  4. Loan tenure is typically between 6 months and 2 years.

  5. Credit check is not mandatory, but it helps to get more loan money if you have a credit score of more than 600.

  6. You need minimal documentation such as ID proof, address proof and passport-sized photos. You don’t need to give salary slips, IT return proof and bank statements.

  7. The LTV or Loan to value ratio has a maximum of 75% if the current gold rate in the market. Therefore, your gold loan amount will depend on things like weight, LTV, purity, carats, etc. Any content in the jewelry apart from gold will not be considered.

  8. The loan amount ranges from Rs. 1 lakh to Rs. 1 crore.

  9. There are facilities of same-day loan disbursal in many banks. Funds can be had in as less as 45 minutes.

  10. Gold loans have low interest rates. This ranges from 10.50% to 13.50%.

  11. Tenure ranges from 6 months to 21 years.

  12. There is no mandatory credit check, by it helps to have 600+ credit score

  13. Documentation requirement is minimal.

Gold Loan Types

Gold loan for women

  1. This loan is only for women customers

  2. These have lower interest rates

  3. These are for both self-employed and salaried people

Agricultural Gold Loan

  1. This is for farmers and agriculturists only, for agriculture and farming

  2. The loan tenure is 2 years

  3. The maximum loan amount is 5 lakhs generally

Personal Gold Loan

  1. These loans are for meeting any financial need. It needs very less paper work

  2. These have same-day loan disbursal, and anyone above 18 years of age can apply to this. Loan needs to be paid back in 2 years.

  3. Interest rate is from 13% to 14%.

MSME Loans

  1. These loans are for small to medium enterprises

  2. These are for fulfilling the requirements of rural borrowers and MSMEs alike

  3. The loan amount depends on the current market rate of gold

Gold Loan Overdraft

  1. This loan is given against gold jewelry that you invest with a lender. It can be pledged to get a loan

  2. One can withdraw an amount with an ATM card, but should have at least one gold overdraft with the bank or with an NBFC.

  3. This loan feature is renewable, but the tenure is 2 years at the most

Term Loan on Gold

  1. These are gold loans that give special offers to borrowers, depending on the chosen loan tenure

  2. Some NBFCs and banks have a discounted rate of interest for short periods of time

  3. The amount depends on the loan tenure

Gold Rate Interest Rates of Top Banks

Bank

Loan amount

Gold loan interest rate

Lowest EMI/lakh for maximum tenure

Catholic Syrian Bank Gold Loan

Rs. 25000 to Rs. 10 lakhs, and more

10.50% to 11.50%

6 to 12 months

SBI

Till Rs. 20 lakhs

11.05%

Rs. 3276 for 36 months

HDFC

Maximum Rs. 50 lakhs

10.50% to 14.50%

Rs. 4638 for 24 months

ICICI

Maximum Rs. 15 lakhs

10% to 16.10%

Rs. 8792 for 12 months

Axis bank

Maximum is Rs. 20 lakhs

14.50% to 17%

Rs. 3442 for 36 months

Andhra Bank

Maximum is Rs. 20 lahks

9.70& to 10.45%

Rs. 8778 for 12 months

Manappuram

Maximum Rs. 1 crore

10.75% to 11.75%

Rs. 8827 for 12 months

Muthoot Finance

Maximum Rs. 1 crore

12% to 26%

Rs. 8885 for 12 months

Canara Bank

Maximum Rs. 10 lakhs

12.65%

Rs. 8915 for 12 months

 

Gold Loan Eligibility Criteria

  1. Anyone can apply for these loans including regular income group, business owners, salaried people, homemakers, and more.

  2. There is no minimum income required.

  3. Minimum age is 18 years.

  4. Gold ornaments need to be at or above 20 carats.

Gold Loan Documents needed

  1. 2 passport-size photos

  2. Copy of ID proof

  3. Address proof documents

How to repay Gold Loans?

  1. By paying the EM each month. These include both principal and interest

  2. Pay the interest in lump sum, and after the term is complete, pay the principal

  3. Pay the interest each month till the end of loan tenure. After that, pay the principal.

Why choose us?

At mymoneykarma, we give you unbiased advice and comparisons of various loan service providers. You can directly go to the website of these lenders, or you can apply for their gold loans form our websites directly.

FAQs on Loan Against Gold

What is a Gold Loan?

A gold loan in India, as the term suggests, is a loan against gold. You can get such gold loan from banks and non-banking financial companies (NBFCs). In such a loan, you give your gold to banks or NBFCs as a pledge to pay back their loan amount. The gold, therefore, is kept as security or collateral. Bank-purchased gold coins and gold ornaments can be pledged. The money you get in return for that can be used to fulfill any needs. For instance, you can use it to have a lavish wedding, go on a foreign trip, repair your home, get a better education, and so much more.

Before giving your gold items to banks for loans, there are a few things you need to keep in mind.

  1. Gold needs to be at and above 20 carats only. Loans are not provided against gold bars, gold biscuits, gold wires, and other forms of this metal.

  2. The loan is kept by the bank as security until you repay the full amount with interest.

  3. All financial institutions provide a high degree of protection to your gold without any charges. All these institutions have the right to keep your gold in case you fail to pay back.

Gold Loan Features

Here are the features of Gold Loan.

  1. Loan amount from various banks and financial institutions is between Rs. 1 lakh to Rs. 1 crore.

  2. Loan disbursal is carried out typically on the day of loan approval. That means you’ll get your finds in as less as 1 hour. If you need instant cash, this is a good option.

  3. The interest rate is low, from 10.50% to 13.50%. There are special gold loans for agriculturists, women, and small businessmen at reduced interest rates.

  4. Loan tenure is typically between 6 months and 2 years.

  5. Credit check is not mandatory, but it helps to get more loan money if you have a credit score of more than 600.

  6. You need minimal documentation such as ID proof, address proof and passport-sized photos. You don’t need to give salary slips, IT return proof and bank statements.

  7. The LTV or Loan to value ratio has a maximum of 75% if the current gold rate in the market. Therefore, your gold loan amount will depend on things like weight, LTV, purity, carats, etc. Any content in the jewelry apart from gold will not be considered.

  8. The loan amount ranges from Rs. 1 lakh to Rs. 1 crore.

  9. There are facilities of same-day loan disbursal in many banks. Funds can be had in as less as 45 minutes.

  10. Gold loans have low interest rates. This ranges from 10.50% to 13.50%.

  11. Tenure ranges from 6 months to 21 years.

  12. There is no mandatory credit check, by it helps to have 600+ credit score

  13. Documentation requirement is minimal.

Gold Loan Types

Gold loan for women

  1. This loan is only for women customers

  2. These have lower interest rates

  3. These are for both self-employed and salaried people

Agricultural Gold Loan

  1. This is for farmers and agriculturists only, for agriculture and farming

  2. The loan tenure is 2 years

  3. The maximum loan amount is 5 lakhs generally

Personal Gold Loan

  1. These loans are for meeting any financial need. It needs very less paper work

  2. These have same-day loan disbursal, and anyone above 18 years of age can apply to this. Loan needs to be paid back in 2 years.

  3. Interest rate is from 13% to 14%.

MSME Loans

  1. These loans are for small to medium enterprises

  2. These are for fulfilling the requirements of rural borrowers and MSMEs alike

  3. The loan amount depends on the current market rate of gold

Gold Loan Overdraft

  1. This loan is given against gold jewelry that you invest with a lender. It can be pledged to get a loan

  2. One can withdraw an amount with an ATM card, but should have at least one gold overdraft with the bank or with an NBFC.

  3. This loan feature is renewable, but the tenure is 2 years at the most

Term Loan on Gold

  1. These are gold loans that give special offers to borrowers, depending on the chosen loan tenure

  2. Some NBFCs and banks have a discounted rate of interest for short periods of time

  3. The amount depends on the loan tenure

Gold Rate Interest Rates of Top Banks

Bank

Loan amount

Gold loan interest rate

Lowest EMI/lakh for maximum tenure

Catholic Syrian Bank Gold Loan

Rs. 25000 to Rs. 10 lakhs, and more

10.50% to 11.50%

6 to 12 months

SBI

Till Rs. 20 lakhs

11.05%

Rs. 3276 for 36 months

HDFC

Maximum Rs. 50 lakhs

10.50% to 14.50%

Rs. 4638 for 24 months

ICICI

Maximum Rs. 15 lakhs

10% to 16.10%

Rs. 8792 for 12 months

Axis bank

Maximum is Rs. 20 lakhs

14.50% to 17%

Rs. 3442 for 36 months

Andhra Bank

Maximum is Rs. 20 lahks

9.70& to 10.45%

Rs. 8778 for 12 months

Manappuram

Maximum Rs. 1 crore

10.75% to 11.75%

Rs. 8827 for 12 months

Muthoot Finance

Maximum Rs. 1 crore

12% to 26%

Rs. 8885 for 12 months

Canara Bank

Maximum Rs. 10 lakhs

12.65%

Rs. 8915 for 12 months

 

Gold Loan Eligibility Criteria

  1. Anyone can apply for these loans including regular income group, business owners, salaried people, homemakers, and more.

  2. There is no minimum income required.

  3. Minimum age is 18 years.

  4. Gold ornaments need to be at or above 20 carats.

Gold Loan Documents needed

  1. 2 passport-size photos

  2. Copy of ID proof

  3. Address proof documents

How to repay Gold Loans?

  1. By paying the EM each month. These include both principal and interest

  2. Pay the interest in lump sum, and after the term is complete, pay the principal

  3. Pay the interest each month till the end of loan tenure. After that, pay the principal.

Why choose us?

At mymoneykarma, we give you unbiased advice and comparisons of various loan service providers. You can directly go to the website of these lenders, or you can apply for their gold loans form our websites directly.

Update: Steep price decline and reduced margins for gold loans

Companies who are offering gold loans are not seeing reduced collateral due to dramatic reduction of pricing of gold.

Many of the top financial service companies have come into the gold loan market segment in the very recent past. They have done so to capitalize on the exceptionally large margins which this industry segment gives. However, they did not account for such a drastic change in the market when the gold price will fall so low. Many such companies are now in trouble, and on the verge of selling their ventures off. It should be noted here that gold’s price has recently come down by 20%, which has given rise to uncertainty in the market.

Lenders who are using gold as security for lending capital keep a margin of around 25%. This decreases the risk of gold’s price fluctuations. Let’s say a bank keeps gold worth Rs. 100 as security, it will just only Rs. 75 as loan. However, with the fall in price of gold in the market by around 25%, the collateral is mostly diminished. This is the sole reason why finance companies right now are facing a very tough situation. They can face losses any time the user delays gold loan repayment.

However, market leaders are optimistic about the current state of the gold loan market. They say that most gold loans are for the short term, and therefore think that the panic is over-hyped. They say that customers do not normally delay payments when the loan is for a short period of time. In fact, customers cannot do so since it risks the banks taking possession of their collateral. Thus, market leaders still have a bullish stance on the gold loan market segment.