Smart lending could not just ensure you’re able to fulfil your critical life goals in time but also help bail you out of financial emergencies. However, pragmatic choice of a lending instrument coupled with disciplined and timely repayments are crucial in preventing any accumulation of debt. And when it comes to lending instruments, it’s usually more cost-effective to go for a secured loan product like a gold loan vis-a-vis an unsecured financing facility like a personal loan.
Another important factor to consider is the credit score. If the credit score of the aspiring borrower is poor, he might not be eligible for an unsecured loan, and even when he does, the applicable interest rate is likely to be much higher than something that is offered to an applicant with a stellar credit score. However, the credit score of a borrower carries a lesser weightage when it comes to a secured loan like a gold loan, according to BankBazaar.
So, if you’re looking for a gold loan, you’ll be well-advised to compare your options to get the best repayment terms pertaining to interest rate, processing fee, prepayment charges, preferred tenure, late payment penalties, ease of application process, etc.
That said, also ensure that the value of your pledged gold should be enough to meet your loan requirements. In August last, the Reserve Bank of India increased the permissible loan to value ratio of gold loans (for non-agricultural purposes) from 75% to 90% to benefit borrowers during the Covid-19 crisis until March 31, 2021. This step is helping borrowers to get a higher loan amount on the same amount of gold to meet their liquidity requirements.
Most importantly, ensure you have a thorough plan for timely repayment of your loan and never borrow more than your capacity to repay. In fact, it’s best if you could limit all your debt obligations to 40% of your total household income, informs BankBazaar.
Here’s a list of 15 banks which are currently offering the lowest gold loans in the country. Do note, we have only considered the lowest advertised interest rates for each of these banks. The interest rate applicable to you could be different based on your loan amount, loan tenure or any other terms and conditions laid down by your lender.
15 Banks Currently Offering the Lowest Interest Rate on Gold Loans
Disclaimer: Data collected from the respective bank’s website on January 28, 2021. Banks are listed in ascending order based on lowest advertised interest rates.*IRR for Qtr October to December 2020. Data compiled by BankBazaar.com.