Lowest Gold Loan Interest Rate
Finding out the lowest gold loan interest rate is crucial before applying for a gold loan as it can save you significant money and will also help in reducing the Equated Monthly Instalment (EMI) amount. Currently, IDBI Bank, HDFC Bank, and UCO Bank offer low-interest gold loans in India.
Compare Interest Rates of All Top Banks in India
Below is the table of comparison of gold loan interest rates of all top lenders in India. The information will help you identify the lowest gold loan interest rate in which bank.
| Bank | Rate of Interest (p.a.) | Loan Amount | Processing Fee | Tenure |
|---|---|---|---|---|
| IDBI Bank Gold Loan | 5.88% p.a. onwards | Rs. 10,000 - Rs. 20 Lakhs | 1% | 3 months - 1 year |
| UCO Bank Gold Loan | 7.40% - 7.90% p.a. | No upper limit | Up to 0.20% | Decided by the bank |
| PNB Gold Loan | 8.65% p.a. | Rs. 25 000 to Rs. 25 Lakhs | 0.30% or Rs. 500 + GST, whichever is higher | Up to 1 year |
| Bank of Baroda Gold Loan | 9.20% - 9.30% | Up to Rs. 25 Lakhs | Up to 0.50% + GST | 1 year - 3 years |
| Canara Bank Gold Loan | 13% onwards | Rs. 5,000 - Rs. 35 Lakhs | 1% | 6 months - 1 year |
| SBI Gold Loan | 8% | Rs. 20,000 - Rs. 50 Lakhs | Nil till 31.01.2023 | Up to 3 years |
| Indian Bank Gold Loan | 8.25% onwards | No upper limit | 0.50% | Up to 35 months |
| ICICI Bank Gold Loan | 10% - 17.95% | Rs. 50,000 - Rs. 1 Crore | 1% | 6 months - 1 year |
| Kotak Mahindra Bank Gold Loan | 8% - 17% | Rs. 20,000 - Rs. 1.5 Crores | Up to 2% + GST | Up to 4 years |
| Axis Bank Gold Loan | 17% - 19% | Rs. 25,001 - Rs. 25 Lakhs | Up to 0.50% | 6 months - 3 years |
| Muthoot Fincorp Gold Loan | 12% - 26% | Rs. 1,500 onwards | Rs.50/loan onwards | 1 - 3 years |
Factors Affecting the Interest Rate of Gold Loan
The following are some common factors that affect the interest rate on a loan against gold:
- Prevailing cost of gold: The gold loan per gram rate will be higher if the cost of gold in the market is on the higher side. This is because the value of the gold ornaments or coins that you will pledge will also be high. Lenders will offer the lowest gold loan interest rate in such cases, as the risk associated will be low. If you are unable to pay EMIs due to any problem, the lender can easily recover the balance loan amount by selling or auctioning the pledged gold ornaments.
- Relationship with the bank: Usually, most lenders offer gold loans to their existing customers. However, in some cases, individuals without any history with the bank can also get a gold loan. Existing customers of lending institutions usually get a low-interest gold loan.
- Inflation: If the rate of inflation is high, there will be a depreciation in the value of the currency, and hence, people tend to gather more gold. This, in turn, increases the price of gold, and at such a time, availing of a gold loan can be cheaper as the bank's gold loan interest rates will be lower.
- Document accuracy: If the documents required for a gold loan are not sufficient or incorrect as per the lender, the gold loan interest rate can be affected.
- Research: It is important to narrow down on some best gold loan banks before you apply for a gold loan, as all lenders offer gold loans at different interest rates. Applying for a loan without detailed research can lead you to get a high-interest loan deal. This is the best way to get the lowest gold loan interest rate.
- Monthly income: When you apply for a gold loan, your monthly income is one of the main factors that the lender will consider, as it shows your loan repayment capacity. The more your income is, the more assured the lender will be about your repayment capability. This will automatically lower the gold loan interest rate charged by the lender.
- Principal loan amount: The loan amount that you need has a major impact on your gold loan interest rate. The interest rate will be higher if you are looking for a higher loan amount. Therefore, before deciding on a gold loan interest rate, make sure to assess the loan amount required by you and compare all available options. You can use the gold loan calculator to know your gold loan eligibility and get an estimated amount.
- Credit score: Your creditworthiness is determined by your credit score. It is one of the most important factors that the lender will consider when calculating the gold loan interest rate. A good credit score means you have a good repayment history and are capable of repaying the loan amount easily without fail. The higher your credit score is, the better your gold loan rate of interest rate will be.
- External benchmark lending rates: The interest rate on your gold loan is determined by the external benchmark to which the lender links their rate of interest. The RBI has instructed that lenders link their lending interest rates to external benchmarks, which is the repo rate or the 10-year government bond rate. Therefore, this rate impacts the gold loan interest rates.
Lowest Gold Loan Interest Rate FAQs
Currently, IDBI Bank, HDFC Bank, and UCO Bank offer the lowest gold loan interest rate in India, starting from 5.88% p.a., 7.60%, and 7.40% p.a.
Yes. In many cases, you may get a low interest gold loan if you have a good credit score.
Yes. In most cases, the bigger the gold loan amount, the higher will be the rate of interest you have to pay on loan.
Apart from the interest rate, the other fees and charges that can be applied on a gold loan are processing fees, documentation charges, late payment charges, penalties for non-payment of interest, valuation fees, etc.
Reshma Rawat is a passionate writer, with a decade of experience in writing for a variety of domains (finance, technology, lifestyle, e-commerce, real estate, etc.). Currently, she is working as Assistant Manager - Content @MyMoneyMantra, and writes blogs & webpages on financial products (loans, credit cards, insurance, financial policies by government, mutual funds, etc.
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