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Gold loan | These lenders offer the best rate for gold loans. Details inside

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Gold loan These lenders offer the best rate for
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These lenders offer the best rate for gold loans

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These lenders offer the best rate for gold loans
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Essentials

  • You can borrow gold in volatile times and during a financial emergency
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  • With minimal documentation and fast payout, gold loan is a seamless solution
  • Low rates should not be a reason for individuals or small business owners to go for a gold loan

New Delhi: A gold loan is one of the best options for raising money to meet the cash need. The best thing about a gold loan is that you don’t need a good credit score or any proof of income to take advantage of it. Anyone over the age of 18 can use a gold loan without any problems. This loan is one of the cheapest options to get money right away.

Since gold loans are backed by physical gold or household gold, lenders generally do not need a high credit score to penalize this loan. Also, the time it takes to pay out a gold loan is much shorter. Both banks and non-bank financial companies (NBFCs) offer gold loans.

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Gold Loan Rates: Banks vs NBFCs

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According to data from Paisabazaar.com, the interest rate on gold loans ranges from 7% to 29%. Banks offer loans at lower interest rates compared to non-bank financial corporations (NBFCs). For example, Punjab & Sind Bank offers gold loans at 7.00-7.50%, Canara Bank at 7.35% and Punjab National Bank at 8.75-9.00%. Bank of India offers gold loans at 7.35%
and State Bank of India at 7.50%.

On the other hand, NBFCs such as IIFL Finance, Manappuram Finance and Muthoot Finance offer gold loans at 9.24-24.00%, 12.00-29.00% and 29% respectively. Knowing the interest rates before you borrow is extremely important as these rates can significantly affect your loan.

For example, taking the lowest and highest interest rate that IIFL Finance offers, if a borrower takes a Rs 2 lakh gold loan for one year. Then, at an interest rate of 9.24%, the borrower has to pay Rs 10,151 as interest expense. However, at 24%, the outgoing interest will be Rs 26,943. That is why it is important to compare interest rates.

Term gold loan:

While interest rates are an essential factor to consider, borrowers should look at other factors, such as the term of a loan. Gold loans are usually provided for a maximum term of 2 years and after that term you can extend the loan. For example, many lenders, such as Punjab & Sind Bank, Canara Bank and Punjab National Bank, offer gold loans for up to one year.

On the other hand, IIFL Finance offers it for up to 11 months, and Manappuram Finance offers gold loans for up to three months under most of its schemes. The term of office of up to 365 days is only available in the Samadhan Plus scheme.

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Private lenders such as Kotak Mahindra Bank and Bandhan Bank offer gold loans with maturities of up to four years and three years respectively. If you are looking for a longer term gold loan, lenders offering lower interest rates will not help much.

It is worth adding that in the case of a gold loan, you must keep gold (in any form, for example jewelry, bar or coin) as collateral. Banks offer up to 80% of the value of gold as a loan. The higher the loan-to-value, the higher the interest rate.

Banks offer flexible repayment options. You can choose the EMI option or bullet refund. Partial repayment is also possible in the case of a gold loan. Documents required for using a gold loan are also very few. You only need to have proof of identity and address along with the PAN card to use this loan.

The post Gold loan | These lenders offer the best rate for gold loans. Details inside appeared first on Notesradar.

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