New Delhi: A gold loan is the best option to raise funds for meeting emergency cash needs such as hospitalisation. The best thing about gold loan is that neither you need a good credit score nor any income proof to avail it. Anybody above the age of 18 years can avail gold loan without any hassel. Both banks and non-banking financial companies (NBFCs) offer gold loans.
This loan is among the cheapest and most hassle-free options to get immediate cash. As gold loans are secured by physical gold or household gold, lenders typically do not require high credit score to sanction this loan. Also, the time taken to disburse a gold loan is very less. Here are some salient features of gold loan:
1) Tenure: Typically gold loans are issued for tenures of up to 2 years and after that tenure, you can renew the loan.
2) Collateral: In case of gold loan, you have to keep gold (in any form i.e, jewellery, bar or coin) as collateral. Banks offer up to 80% of the value of gold as loan. Higher the loan-to-value, higher will be the interest rate.
3) Repayment: Banks offer flexible repayment options. You can either go for EMI option or opt for bullet repayment. Partial repayment is also available in case of gold loan.
4) Credit score: For availing gold loans you don’t need to have a good credit history. But if you have a good credit history, then you can avail gold loan at cheaper rates.
5) Documentation: Documents required for availing a gold loan are also very few. You only need to have identity and address proof along with PAN card for availing this loan.
6) Interest rate: As gold loan is a secured loan, interest rate on it is much less than a personal loan, which is an unsecured loan. At present, personal loans are available at interest rates between 10-15% depending on your job profile and credit score. But gold loans can be availed at an interest rate starting from 7%. Here are the top five banks that charge lowest interest rate on gold loans at present.
Bank Name Interest rate
Punjab & Sind Bank 7.00%
Union Bank 7.20%
Bank of India 7.35%
State Bank of India 7.50%
Canara Bank 7.65%