Five Banks That Charge The Lowest Rates On Gold Loans Starting From 7%

WHAT IS A GOLD LOAN?

A gold loan is a loan that one can avail of from a bank. It is a secured loan which means that when a person wants to take a gold loan, he needs to pledge his gold articles as collateral or security. The gold will be kept safely by the bank or by the moneylender, and after the successful completion of the loan and the repayment of the EMIs, the gold that the borrower pledged is given back to him. In this loan, the loan amount depends on the market value and the purity of the gold rather than the source of income. If a person is not earning at the time of availing of a loan, the bank can also accept his application.

WHAT IS AN INTEREST RATE?

When a borrower takes a loan from the bank, he has to repay the loan to the bank or the moneylender with interest after the disbursal of the amount of money. This is how the banks make money. So, when a person takes a gold loan from a bank, he will need to repay the loan with the gold loan interest rate. The interest rate varies from bank to bank and from one moneylender to another. Some of the banks offer lower interest rates on the gold loans that they provide. 

BANKS THAT CHARGE THE LOWEST INTEREST RATES ON THE GOLD LOANS STARTING FROM 7%: - 

The gold deposited by the borrowers support the gold loans, and therefore, they do not require high-interest rates. The time taken to disburse the loan is very little as compared to the other loans.

The following are the top five banks that charge the lowest rate of interest on the gold loan: -

• Punjab and Sind Bank: - The rate of interest offered on the gold loan is 7%.
  
  
• Bank of India: - The rate of interest offered on the gold loan by the Bank of India is 7.35%.
  
  
• State Bank of India: - The interest rate on a gold loan offered by the State Bank of India is 7.5%.
  
  
• Canara Bank: - The rate of interest offered by the Canara Bank on a gold loan is 7.65%.
  
  
• Union Bank: - The interest rate on a gold loan offered by the Union Bank is 8.2%.

FEATURES OF A GOLD LOAN: -  A gold loan is one of the cheapest and the most hassle-free loans. A person can get immediate cash. The money lenders or the banks do not require high credit scores. The time taken to disburse a gold loan is also less as compared to the other loans. 

Following are some of the features of a gold loan: -

• Tenure: - The banks issue the gold loans for tenures of upto twoIn addition, the years. You can renew the loan after that tenure.
  
  
• Collateral: - In a gold loan, you have to keep your gold as collateral or security to the bank. The banks can offer upto 80% of the value of the gold as the amount of loan. The higher the loan to ratio value, the higher will be the rate of interest.
  
  
• Repayment: -  A person gets flexible repayment options to repay a gold loan. He can either go for a regular EMI option or the bullet repayment method. In the case of a gold loan, partial payment is also available for gold loan at HDFC  offers flexible options.
  
  
• Credit score: -  You do not have to worry if you do not have a credit score or a good credit history. Your loan application will be accepted if you have a low credit score.
  
  

Documentation: -  The documentation process involved in a gold loan is really easy and minimal. There are not many documents required, just the basic ones such as identity proof, address proof, etc. In some of the banks, income proof is also not needed to apply for a gold loan.

Must Read:- Best features for Gold Loan