Short-term money crises can be a nightmare because you have few money options – like using credit cards, taking a personal loan or gold loans for financing.
You end up paying lesser interest when you opt for gold loans, a much better option when compared to credit cards and personal loans.
On average gold loan costs you around 14% – 16% as compared to a personal loan (18% – 20%) and credit cards (36% – 42%).
Below is the list of the best bank for gold loans in India for 2021.
Best Gold Loan Interest Rates Comparison
| HDFC Bank | 9.50% to 17.55% |
| Axis Bank | 12.50% to 17.50% |
| State Bank of India | 7.50% |
| Manappuram Finance | 12% to 29% |
| Muthoot Finance | 12% to 27% |
| ICICI Bank | 10% to 19.76% |
| Punjab National Bank | 8.75% to 9.0% |
| Yes Bank | 8.40% to 14.40% |
| Federal Bank | 8.50% onwards |
| Punjab & Sind Bank | 7.00% to 7.50% |
| IIFL | 9.24% to 24% |
Best Gold Loan in India 2021
Table of Contents
#1. HDFC Bank Gold Loan
You can take a loan starting from Rs. 25,000 and above. The gold loan from HDFC Bank is in the form of a term loan, overdraft or bullet payment (where you repay interest & principal at the end of the tenure).
You need minimal KYC documents and HDFC takes 45 to 60 minutes to disburse gold loan.
9.50% to 17.55%
Tenure – 3 months to 24 months
Loan processing fee – 1% of the loan amount
Prepayment charges – 2%
Foreclosure charges – 2% depending on tenure & ROI
- Quick processing and disbursal
- Period up to 24 months
- 1% processing charges
- 2% foreclosure charges
#2. Axis Bank Gold Loan
Axis gold loan amount starts from Rs. 25,001 to Rs. 25 Lacs. The loan amount is disbursed on the same day. You have the flexibility to apply for the gold loan – online, on the phone or by visiting the branch.
12.50% to 17.50% p.a.
Tenure – 3 months to 36 months
Loan processing fee – 1% of the loan amount
Foreclosure charges –
- 2% if closed before 3 months
- 1% if closed between 3 – 6 months
- 0.50% if closed between 6 – 11 months
- NIL after 11 months
- 36 months loan period
- Higher rate of interest
- 1% processing charges
#3. State Bank of India Gold Loan
You can avail gold loan from Rs. 20,000 to a maximum of Rs. 20 Lacs at SBI. You can choose to have any one type among three types of gold loans available at SBI.
| Details | Gold Loan | Liquid Gold Loan |
Bullet Repayment Gold Loan |
| Repayment | EMI | Overdraft | Bullet payment |
| Maximum Tenure | 36 months | 36 months | 12 months |
| Margin | 25% | 25% | 35% |
1-Year MCLR + 0.50%
Present the 1-year MCLR is at 7%. Hence, gold loan interest rate is 7.50%.
Loan processing fee – 0.25% of the loan amount, Minimum Rs. 250. NIL processing fee if application is made through SBI YONO App
Prepayment / Foreclosure charges – NIL.
- Lowest interest rate of 7.50%
- NIL pre-payment charges
- 35% margin for bullet repayment loans
#4. Manappuram Finance Gold Loan
Manappuram Finance has a wide range of gold loan schemes for amounts starting from 1,000 rupees to Rs. 1.5 Crores. However, the drawback is that most of the schemes have a maximum tenure of 90 days.
12% to 29%
Tenure – 3 months to 12 months
Loan processing fee – Rs. 10 charged at the time of settlement
Late payment charges – 3% p.a
Part payment/ Foreclosure charges – NIL.
- Loan ranges from Rs. 1,000 to Rs. 1.5 crores
- NIL prepayment penalty
- Low loan processing fees
- Most of the schemes have 90 days tenure
- Higher rate of interest
- 3% p.a. late payment charges
#5. Muthoot Finance Gold Loan
Muthoot Finance offers gold loans through 12 schemes for a loan amount ranging from Rs. 1,500 to no upper limit depending on the need and collateral offered.
12% to 27%
Tenure – 30 days to 3 years
Loan processing fee – Rs. 50 to 1% depending on the loan scheme
Prepayment/ Foreclosure charges – NIL
Penal Interest charges – up to 2%
- Loan ranges from Rs. 1,500 with no upper limit
- 30 day gold loan available
- NIL prepayment penalty
- A higher rate of interest
- up to 2% penal interest charges
#6. ICICI Bank Gold Loan
You can choose the loan amount in a range from Rs. 10,000 to Rs. 1 Crore for the gold loan at ICICI Bank. ICICI has a quick and easy online process with a 45-minute gold loan disbursal.
You can apply for a gold loan even if you do not have an account with ICICI bank.
10% to 19.76%
Tenure – 3 months to 12 months
Loan processing fee – 1% of the loan amount
Late payment charges – 6% p.a. over and above the normal rate of interest
Prepayment/ Foreclosure charges – 1% if closed within 11 months for a 12-month scheme and 5 months for a 6-month scheme
- Easy application and quick processing
- Up to 1 Crore loan amount
- Maximum tenure of 12 months
- 6% penal interest
- Rs. 199 documentation charges
#7. Punjab National Bank Gold Loan
PNB offers gold loans for both productive purposes (like agricultural/ allied and other activities) and for non-productive purposes (like medical, marriage, education loan or other purposes).
The gold loan limits are from Rs. 25,000 to a maximum amount of Rs. 10 Lacs.
PNB gold loan requires a 25% margin for EMI loans and a 35% margin in the case of a bullet repayment option.
Gold loan in the form of term loan or demand loan – RLLR + 1.95% i.e. 6.80% + 1.95% = 8.75%
Gold loan in the form of overdraft – RLLR + 2.20% i.e. 6.80% + 2.20% = 9.0%
Tenure – 12 months
Loan processing fee – 0.75% of the loan amount
Prepayment charges – NIL
- NIL prepayment charges
- A lower 8.75% rate of interest
- Maximum tenure of 12 month
- LTV of 65% for bullet repayment option
#8. Yes Bank Gold Loan
From Yes bank you can take gold loans for an amount starting from Rs. 25,000 to Rs. 50 Lacs with a maximum tenure of 36 months.
The gold loans are available on 18 to 22-carat gold and even on gold coins with a maximum weight of 50 grams.
8.40% to 14.40%
Tenure – 3 months to 36 months
Loan processing fee – 0.75% of the loan amount
Prepayment/ Foreclosure charges – 1% if prepaid before 6 months
- 36 months tenure
- Higher loan amount
- 1% foreclosure charges
- Rs. 150 gold deposit charges
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#9. Federal Bank Gold Loan
Federal bank gives gold loans for personal, business and agricultural purposes. The minimum loan amount is Rs. 1,000 and the maximum amount is Rs. 1.5 Crores.
Gold loans in the form of overdraft carry an LTV of 75% of the value of gold. For other gold loans, the LTV is a maximum of 85% of the gold price.
8.50% onwards
Tenure – flexible tenure
Loan processing fee –
- For loan up to Rs. 5 Lacs – Rs.600
- For loan amount over 5 Lacs – 0.5%
Prepayment/ Foreclosure charges – NIL
- NIL prepayment charges
- Higher loan amount of 1.5 Crores
- Maximum 85% LTV for gold loans
- 16.50% penalty for delayed payment
#10. Punjab & Sind Bank Gold Loan
You can avail gold loans from Punjab & Sind bank for productive purposes (like agriculture) and non-productive purposes like medical, education, or marriage expenses.
The amount of loan is –
- Productive purposes – Maximum of Rs. 30 Lacs
- Non-productive purposes – Maximum of Rs. 2 Lacs
But the margin required is 30%.
7.00% to 7.50%
Tenure – maximum of 12 months
Loan processing fee – up to 1%
Prepayment/ Foreclosure charges – NIL
- NIL processing and foreclosure charges
- One of the lowest interest rate of 7% to 7.5%
- Maximum 2 Lacs loan for non-productive purposes
- 30% margin
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#11.IIFL Gold Loan
IIFL offers gold loans starting from Rs. 3,000. IIFL has an online application process. If everything is in place, then you can expect quick approval and disbursal, usually in 30 minutes to an hour.
The gold loan has multiple repayment options – like online payment, payment at branch and repayment via mobile apps.
Starting from 9.24% to 24% p.a.
Tenure – 3 to 11 months
Loan processing fee – depending on schemes
Mark to Market Charges – Rs. 500
Prepayment/ Foreclosure charges – Maximum Rs. 150 if closed within 3 months after that no charges
- NIL foreclosure charges after 3 months
- Repayment from mobile app also
- Maximum 11 months loan period
- 500 rupees as MTM charges
Best Gold Loan Company in India
#1. State Bank of India
SBI has largest network of branches with Pan-India coverage.
The gold loan at SBI has one of the lowest interest rates at 7.50% p.a. with tenures up to 36 months and NIL prepayment charges.
#2. HDFC Bank
HDFC Bank processes gold loan within 60 minutes and require minimal documents.
HDFC Bank gold loan is in the form of a term loan, overdraft or based on EMI with interest rates starting from 9.50%.
#3. Federal Bank
Unlike other banks, Federal Bank has the highest LTV of up to 85% and the lowest interest rate of 8.50% onwards.
Federal bank offers loan amount from Rs. 1,000 to Rs. 1.5 Crores for personal, business and agricultural purposes.
#4. Punjab & Sind Bank
Punjab & Sind Bank offers gold loans at the lowest interest rate of 7.0% to 7.50%.
The gold loans come with NIL foreclosure charges and are available for productive and non-productive purposes.
#5. Muthoot Finance
Muthoot Finance offers gold loans starting from Rs. 1,500 to no upper limit.
The gold loan schemes to have tenure ranging from 30 days to 3 years.
Things You Should Consider While Having a Gold Loan
- Gold Loans are for Short Term
- Rate of Interest
- Valuation of Gold
- Margin or Loan to Value (LTV)
- Form and Purity of Gold
- Not Every Jewelry is Eligible for Loan
- Repayment Conditions
Gold Loans are for Short Term
Gold loans have tenure in the range of 3 months to 36 months. Gold loans can tide your financial crises for a maximum period of 3 years only.
Be doubly sure that you are able to repay within the timeframe else your gold can get auctioned. Hence, the gold loan should not be used for speculation or other risky purposes where repayment can be in doubt.
Rate of Interest
The rate of interest on the gold loan varies from banks to banks, typically the interest rate starts from 10% and goes as high as 29%.
Valuation of Gold
Rate per gram or valuation method affects the loan amount. Some banks consider the average of the last two weeks’ gold price to arrive at the rate per gram. While others prefer the daily rate for valuing gold.
Prior information on the valuation method adopted by the banks can help you get more loan amounts.
Margin or Loan to Value (LTV)
The banks will not finance 100% of the gold jewelry value. The loan amount you can expect is 75% to 85% of the entire value of gold.
Form and Purity of Gold
Banks accept gold with a purity level of 18 carats and above with the higher purity gold getting a higher rate per grams.
Banks prefer gold ornaments over coins because of attached sentiments which ensures timely or early repayment. Further, the gold coins should be of 99.99% purity with weight not exceeding 50 grams.
Not Every Jewelry is Eligible for Loan
Not all jewelry can be pledged for a gold loan. Precious gems and stones studded in the gold ornaments are not valued and are not considered for gold loans.
Banks do not offer gold loan on gold bars or gold bullions. Further, gold bonds or gold ETFs are also not considered for gold loans.
Repayment Conditions
Gold loans have flexible repayment options. Some banks allow payment of only interest with an option to repay the principal at the end.
Others structure repayment in the form of EMI or bullet repayment. In bullet repayment, you repay all the interest and principal at maturity.
Factors Affecting Gold Loan Interest Rate
- Loan Amount
- Loan to Value Ratio (LTV)
- Relationship with the Bank
- Tenure of the Loan
- Inflation
Loan Amount
In case of gold loans repayment capacity is not the key factor but the value of gold is. Which in turn is dependent on the purity level of the gold.
The higher loan amount comes with a lower interest rate and the interest rates are higher for small gold loan amounts.
Loan to Value Ratio (LTV)
A gold loan with a higher LTV will attract more interest rate when compared to a loan with a lower LTV. The reason being the higher amount of the loan per gram of gold.
Lower LTV results in the lower loan amount or pledging of more gold, hence the lower interest rates.
Relationship with the Bank
Banks charge a lower rate of interest on gold loans for existing customers with healthy relationships in the past having no defaults and overdrafts.
Maintaining good relationships becomes handy where you can bargain better rates and also helps in smooth processing and quick disbursal.
Tenure of the Loan
The gold loan comes with tenure ranging from 3 months to 36 months. Lower tenure gold loans attract higher interest rates whereas longer period gold loans have lesser interest rates.
Inflation
Higher inflation results in the reduced purchasing power of the money. In order to compensate for the decrease, banks charge a higher interest rate on the gold loan.
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