Gold loan is considered the easiest way of taking a loan from a bank account.
It is a kind of secure loan in which banks and money lenders provide you with a high amount of loan benefits against your gold asset.
To get a gold loan from a bank, you need to deposit your gold asset. Whether in the form of ornaments, jewels, or others.
A major benefit of a gold loan is that it allows you to meet all your expenses.
The government of India is also spreading awareness of gold loans among the people of the country.
Due to such a great hype of gold loans in the country, different banks and money lenders are providing it with great features and benefits to the applicants.
But it also has raised confusion among people to select which bank is best for gold loans.
Well! We are here with a detailed guide that will help you get a better idea about which bank you can avail loan of.
After reading the article, you will be able to decide which bank’s gold loan fits your requirements.
Table of Content
- What is a gold loan?
- Features of gold loan
- How does a gold loan work?
- Eligibility criteria for getting a gold loan
- Documents required
- Which bank is best for gold loans in India?
What is a gold loan?
A gold loan is a kind of secured loan in which you deposit your gold asset in the bank locker to avail of loan benefits.
The bank first evaluates your gold value and then provides you with a lump-sum amount as a loan with an extensive tenor and a low interest rate.
Gold loans can be availed for any purpose.
Whether it is to meet your educational expenses or travel expenses, gold loans cover almost anything, provided it is legal.
It is considered the easiest and the quickest way to get loan benefits because once your gold is evaluated and your loan application is approved, the loan amount is disbursed to your bank account within a very quick period.
Once you pay the loan amount along with the interest charged within the given tenure, you will get your gold asset back.
The process is quite transparent and doesn’t need any heavy paperwork.
Also Read: SBI Gold Loan – Everything you need to know
Features of gold loan
When you take a gold loan from a bank, you open yourself to a number of features and benefits.
Different banks provide you with different features on the gold loan.
To make it convenient for you, we have arranged the major features provided by the banks in common in gold loans.
The major features that banks offer you in gold loan schemes are as follows.
1. Fast processing
As we mentioned above that gold loans are secured loans, the eligibility criteria become quite simple.
Also, you need not submit heavy documents to the bank to get the loan benefits.
Because of these reasons, the loan disbursal process is quite fast that gives a major benefit to the applicants as well as the lending banks.
2. Loan for different purposes
Gold loans are kind of personal loans also because they allow you to meet all your personal expenses.
With the help of a loan against your gold, you can meet your travel expenses, pay your educational charges, medical charges, or meet wedding expenses.
You can also clear your past remaining debts with the help of gold loans.
3. Low interest rates
A big feature that you get with gold loans is the interest rate they charge.
Gold loans are secure. So they involve less security so they charge less interest rate from you as compared to any other unsecured loans.
Also, you can take loans against gold from banks for the priority sector as well as the agricultural sector.
4. Low processing charges
Unlike the other unsecured loans, you will have to pay a very small processing fee to the banks to disburse the amount into your bank account.
Some banks even do not charge any processing fees from you when you apply for a gold loan.
5. No income proof and credit score
The eligibility criteria for taking a loan against a loan are very simple.
Unlike the other unsecured loans, you need not provide the bank with income proof such as your salary receipt and bank statements.
Also, there is no impact of credit score on your loan disbursing process.
If you have provided the bank with high-quality gold assets, you can get a very high amount of loans with minimal documentation.
6. The high amount and easy accessible
Against your pure gold, you can take a very high loan amount from the bank quite easily.
Also, the loan processing and disbursing process are around the simplest of all.
How does a gold loan work?
You have come across the introduction and features of gold loans. Now, you would be thinking of how the process goes.
Well! We have divided the whole process into 6 simpler steps so you understand the process in a better way.
1. Check the eligibility of the gold accepted
At the very first step, you need to check which type of gold assets the banks accept for gold loans.
A major part of banks provides gold loans only against gold jewels.
However, some banks also offer it against gold ornaments or in other forms.
Also, you need to make sure that the gold purity lies between 18 Karats to 22 Karats.
2. Verify the loan eligibility and select a bank
In the second step, you will be checking the loan amount eligibility.
The loan eligibility against gold is calculated with the help of weight, LTV ratio, market rate, and purity of the gold you are providing.
You should always go for a bank that is providing you with high loan amounts at low interest rates, processing charges, and foreclosure charges.
3. Apply for a gold loan in the bank
Now you have selected your bank, you need to apply for a loan against your gold from that bank.
You can either apply for the loan from the bank online by visiting their official website or offline by visiting the nearest bank branch.
After your application, a bank representative will get in touch with you soon to confirm the application details and to fix an appointment.
4. Document verification
To get any kind of legal loan in the country, you need to provide the lender or bank with copies of some documents that verify you as a legal and eligible person for the loan.
In gold loans, you might need to submit KYC documents such as your address proof and identity proof.
Also, you need to submit the gold at the same time for verification in the next process.
5. Gold purity evaluation
Once you submit the gold asset to the bank, there will be a gold purity evaluation to check the purity of the gold.
After the process, the estimated value of the gold will be finalized according to its weight and the market value.
6. Loan disbursal
If you have provided high-quality gold assets and legal documents to the banks.
The banks will approve your loan request within a very short period. After the application approval, your loan amount will be disbursed to your bank account within a few hours, even minutes.
The gold will be secured by the bank as per the RBI guidelines.
Eligibility criteria for getting a gold loan
As we have mentioned above that gold loans are secured loans, the eligibility criteria are quite simple and accessible.
We have mentioned the simple eligibility criteria that you have to pass on to get a loan against your gold from the best banks in the country.
- The applicant ought to be an Indian resident aged over 18 years to 75 years.
- The applicant can be a salaried, self-employed, housewife, senior citizen, or businessman.
- Your submitted gold must be pure between 18 Karats to 22 Karats.
Gold loans require the minimum documentation among all the other kinds of gold loans.
Below, we have mentioned the important documents that you need to submit to the banks and NBFCs for availing of gold loan benefits.
- Your identity proof that includes PAN Card, Aadhaar Card, Voter ID Card, and Passport
- Your address proof that includes your Driving license, Rent agreement, Passport, Aadhaar Card
- A couple of passport-sized photographs
Which bank is best for gold loans in India?
You have covered almost everything about gold loans.
The eligibility criteria, and the loan disbursing process and now it comes to choosing the best bank for you.
To help you decide which bank is best for gold loans in India, we have created a table with a comparison of different banks and their loan amount along with the interest rates charged.
Gold loan interest rate comparison
|Bank||Loan amount||Interest rate|
|SBI Gold Loan||From 20,000 to 5 lakh||Up to 7% per annum|
|ICICI||From 10,000 to 1 Crore||From 9%-19.76% per annum|
|HDFC||From 10,000 with no maximum limit||From 11%-16% per annum|
|Muthoot Finance Gold Loan||From 10,000 with no maximum limit||From 12%-26% per annum|
|Manappuram Gold Loan||As per the requirement of the loan scheme||Up to 29% per annum|
So, these are some of the leading gold loan providers in the country that provide gold loans in very high amounts with fair interest rates.
This table will help you get a good idea about which bank can be ideal for your gold loan requirements.
Before going to a bank for your gold loan, make sure you keep your requirements clear and then analyze each bank according to your requirements to get the best.
Q 1. Is there any effect of my credit score on my gold loan interest rates?
Ans: No, the credit score doesn’t play any role in the procedure of a gold loan.
Here, the loan is provided to you on a secure basis wherein your gold asset is kept as collateral.
Q 2. Is there any privilege for farmers?
Ans: Yes, as agriculture falls under the priority sector, banks provide a rebate on the interest rates to farmers who are taking loans to fund their agricultural processes and infrastructure.
Q 3. How can I repay the loan amount to the bank?
Ans: If you have the funds to repay the loan amount, you can repay your gold loan by cash, cheque, money transfer, or by demand draft.
Gold loans are secure and are quite accessible.
They can be considered the simplest way of availing of high amounts of loan benefits.
You can get them at lower interest rates and minimal documentation. As gold loans are secure, the eligibility criteria also become quite simple.
Gold loans are supported by the government and your gold will be secured under the guidelines of RBI.
In the article above, we have provided you with detailed information about gold loans in India and how you can compare among the best banks in the country.
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