Gold Loan Interest Rate Calculator

Interest rates are charged on the borrowed loan amount for the loan tenure. Lowest interest rate on gold loan is 9.90%. Interest rate to get loan against gold depends on multiple factors -

Loan amount – This is the amount borrowed by the borrower from a bank. Generally, interest rate are high for smaller loan amount and vice-versa.

Loan to Value Ratios - Banks charge higher interest on gold loan with high LTV ratio. Hence, higher the loan to value of jewellery, higher the interest rate and vice versa.

Relationship with the Bank - Banks offer lower rate of interest on jewel loan for their existing account holders with a quick turnaround.

Loan Against Gold Schemes

Gold Loan Schemes can be categorized based on the purpose of lending. Banks usually offer lower rate of interest for agricultural gold loans which are offered to farmers and people engaged in agriculture for meeting their farming expenses.

• Agricultural Gold Loans: These are loans extended to farmers and agriculturists against gold ornaments to provide them finance for crop production expenses and investment purpose in agriculture or allied agricultural activities. Key Features of such loans are:
  • Evidence of farming activity in form of proof land records is required
  • Written undertaking by the borrower on the purpose for which he intends to use the loan is required. Banks may also monitor the end use of such loans
  • Loans extended for agriculture are categorized under priority sector lending and are eligible for interest subvention scheme from government, which reduces the interest cost to the borrower
  • These loans are allowed generally for a maximum period of 3 years
  • Some banks also offer the option of overdraft facility on such loans
  • Interest Rate on agricultural gold loans ranges from 8.00 to 10.00 %
• Non Agricultural Gold Loans: Loans extended to all other categories of borrowers excluding farmers and agriculturists are known as non agricultural gold loans. These loans are available to all individuals including salaried, self employed professionals, businessmen, women, females, housewives, students, retired officials who own gold and want to pledge the same to get loan. The features on non agricultural gold loans have been explained under the loan schemes by repayment options.

• Bullet Repayment: This is one of the most popular repayment option offered by banks and NBFCs, where the entire principal amount is repaid at the end of the tenure. This repayment option is more prevalent for shorter tenure jewel loans of less than 6 months, as this allows the borrower to utilize all borrowed funds for the required purpose and hence, save them from the burden of repaying principal every year. Key Features of such schemes are:
  • Loan amount is repaid at the end of the tenure
  • Interest is calculated on a monthly basis, with an option to pay interest only EMIs every month, where you pay monthly interest in the form of EMIs
  • Some banks allow a lower LTV of 65% on such schemes compared to maximum LTV of 75% on other loan schemes.
• EMI Scheme: Though not very popular earlier, this scheme is increasingly being offered to jewel loan borrowers. Borrowers are required to pay monthly instalments or monthly EMIs to banks. This scheme is especially popular for longer tenure gold loan schemes with greater loan amounts. Key Features of such schemes are:
  • Lowest EMI for a Rs 1 Lakh loan is ₹ 2,531 at the lowest gold loan interest rate of 9.90% and maximum tenure of 4 years.
  • Attractive LTVs of upto 75%
  • Banks call for 6 months PDCs for EMIs. Some banks exempt the borrowers from PDC requirement for larger ticket size loans
• Overdraft Scheme: This schemes is especially designed for businessmen and self employed who have fluctuating requirement for funds. The overdraft scheme allows the borrowers to withdraw any fund requirements or deposit any surplus in an overdraft requirements within a pre approved credit limit. Interest is charged only on the utilized portion at any given point of time. Key Feature of such schemes are:
  • Has an overdraft facility that allows deposit and withdrawal of funds during loan tenure
  • Interest expenses are minimized as it allows the borrower to deposit funds in the account when he has surplus funds
  • Available on all ticket sizes, though will be more suitable for relatively larger ticket size loans
  • Also comes with an option to renew the limit at the end of the tenure by paying processing fees

Comparison of Gold Loan Rates in India

• Gold Loan Processing fees – Most banks charges minimum processing fees of Rs. 1,000 to upto 2%. Some banks may also offer lower processing fees. To get lowest fee, gold loan interest rate comparison, offers and cashback applying online through MyLoanCare.
• Gold Loan Prepayment and foreclosure – Nobody wants to keep paying interest on a loan when you have surplus money available to repay it. When you want to repay your loan partially before time, it is called part prepayment. In case you decide to pay the entire loan amount before time, it is called foreclosure. Banks typically levy prepayment or foreclosure charges in such situations and these can range from nil to even upto 1%. So, check carefully if the low interest rate gold loan you are getting comes with high prepayment or foreclosure charges. Some loans also come with a lock-in-period and cannot be repaid before time.

Checklist for Gold Loan

• Identity proof
• Residence address and ownership proof
• Photo identity proof
• Passport size photograph

Documents Required

Impact of Coronavirus on Gold Rates

The outbreak of Coronavirus has created an unexpected level of anxiety among investors. This impact has affected all the assets, including the gold futures. On the one hand, investors wary of investing in gold. On the other hand, people are considering every option to maintain a good stock of savings and have started investing in gold as a safe option. This has ultimately impacted the gold prices severely. On 16th Jun 2020, the 22 carat gold prices stands at ₹ 4,610 per gram.

Frequently Asked Questions

Which bank has lowest interest rate on gold loan?

Following are the banks with lowest interest rate on gold loan:

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?

For an Indian, jewelry is extremely precious and close to heart. Yet, in times of need, you might need to mortgage them to meet your urgent expenses. At such times, you need to ensure that you get the maximum 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.

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.

Why do I need Gold Loan?

These loans are usually taken for short term requirements. Generally, these are used for children education, marriage and other financial emergencies in the family. Usually rate of interest on jewel loan is relatively low as it a secured loan for banks and NBFCs.

What are the benefits of Gold Loan?

Gold Loan has the following benefits:

• Allows you to utilize your jewel holdings in times of urgent expense requirements and emergencies
• Low interest cost compared to personal loans
• Easy loans with no income proofs and no CIBIL checks required.
• Also allows first time borrowers and borrowers with bad credit to get loans.
• Helps improve CIBIL score, as timely repayment is recorded in your CIBIL reports
• Instant loans with turnaround time of few hours to 1-2 days
• Loan amounts of up to Rs 50 lakh also available
• No end use restrictions. The loan can be taken for any personal or business expenses
• No proof in the form of invoice or purchase bill of the jewelry required

What are the disadvantages of taking a Gold Loan?

We do not see any significant disadvantages of taking a gold loan except that you need to part away with your gold holdings and take them to the nearest branch of the lender for valuation and depositing it with the bank. RBI has specified strict guidelines for ensuring complete safety of your ornaments when they are pledged with a bank or a NBFC.
In addition to this, for salaried employees working with reputed companies taking a gold loan might be easier and come at a low rate of interest compared to personal loan.

Does my credit score have any effect on my gold loan?

To avail the gold loan, credit score is not mandatory. So, whether you have a credit history or not, is not considered during the loan application process.

Is taking gold loan safe?

All the top banks and NBFCs provide the gold loan. The gold you submit as collateral is kept safe under high security as per the guidelines of RBI. After you have repaid the loan along with interest, your gold is returned to you in the same form. Thus, availing the gold loan is safe.

Which is better: Gold Loan Vs Personal Loan?

A gold loan is a secured loan, while a personal loan is an unsecured loan. The average rate of interest that you can get in the gold loan is much lower than what you will get in personal loan. However, the maximum tenure of the loan is upto 3 years for the gold loan while it is 5 years for the personal loan. So, in case you have gold, and you think you can repay the loan within 3 years, gold loan is a better option in this scenario.