Amid the rising geopolitical tensions, gold has emerged as one of the key assets, generating higher-than-expected returns for investors. Gold's robust performance has resulted in an increase in the appeal of gold-backed loans as investors look for quick liquidity at reasonable rates.
At present, interest rates on gold loans range from 8% onwards, with lenders offering higher loan-to-value (LTV) ratios, allowing borrowers to avail larger amounts against their gold.
Gold Loan Features:
A gold loan is a secured loan where borrowers pledge gold jewellery or coins as collateral to obtain funds from a bank or non-banking financial company for personal or business purposes.
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Investors should note that gold loan rates depend not only on gold's value and purity but also on factors like loan tenure, lender type, loan amount and the chosen repayment structure.
How Gold Loan Interest Rate Calculated?
A gold loan interest rate is the percentage charged by banks or financial institutions on the loan amount when borrowers pledge their gold assets as collateral. Borrowers can repay the interest either monthly or as a lump sum.
Typically, banks offer lower rates around 8 to 12% on gold loans, while NBFCs and private lenders may charge higher rates. Higher rates are also particularly applicable if the loans are for short-term.
Interest Rates Charged By Top Indian Banks:
India's largest lender, State Bank of India, offers attractive features for borrowers seeking gold loans. The maximum loan amount is Rs 50 lakh, while the minimum starts at Rs 20,000. Borrowers can opt for an EMI-based repayment structure with an interest rate of 9.95% onwards.
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Similarly, HDFC offers hassle-free gold loans starting from Rs 25,000, making it accessible for various financial needs. With interest rates beginning at 11.91% p.a., borrowers can turn to the bank to leverage their gold assets for personal or business purposes.
Similar rates are also charged by other top lenders in India, such as Punjab National Bank (PNB), ICICI Bank, Bank of India, Axis Bank, Bank of Maharashtra, among others.
Here's a look at the gold loan rates of major banks:
- SBI - 9.95% onwards
- HDFC Bank - 11.91% onwards
- ICICI Bank - 9.25% onwards
- Bank of Maharashtra - 8.50% onwards
- Axis Bank - 8.90% onwards
- Bank of Baroda - 9.15%
- Bajaj Finance - 9.50%
- Shriram Finance - 10%
- Mannapuram Gold - 9.90%
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