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Gold loans are good for emergency money

August 05, 2019 09:00 IST

A gold loan can, in many situations, be a better option than a personal loan due to its quick processing time and minimal documentation, suggests Tinesh Bhasin.

Photograph: Shailesh Andrade/Reuters

Gold loans are handy when you need money urgently.

Typically, lenders give up to 75 per cent of the value of the gold as a loan after checking its purity, weight and market price.

 

A gold loan can, in many situations, be a better option than a personal loan due to its quick processing time and minimal documentation.

Many lenders don't even check credit bureau score or ask for proof of income.

Some non-banking financial companies (NBFCs) primarily focus on gold loans, and such lenders offer higher valuation (higher gold loan per gram).

Opt for an NBFC if you are looking for a higher loan amount. Choose a bank, if you are a rate-sensitive, as banks offer more competitive interest rates on gold loans.

Gold loans also come with flexible repayment tenure.

You can opt for the regular equated monthly instalment (EMI), or pay interest as EMIs and principal in full at the time of maturity.

Then there's bullet payment, where the borrower pays entire interest and principal at the end of loan term.

Some lenders also offer an overdraft facility on gold loan.

Rates and charges for a gold loan
  Interest rate Processing Fee Loan Amount (Rs) Loan Tenure
Mannapuram Finance 9.9%-29% Rs 10 (at the time of loan settlement) 1,000-1.5 crore Upto 365 days
Muthoot Finance Upto 26% Upto 1% of loan amount 1,500 onwards Upto 3 years
IIFL 9.24%-24% Depends on scheme availed Rs 3,000 onwards 3 months-11 months
South Indian Bank 10.9% (floating) 9.65%-14.7%(fixed) Upto 0.1% of loan amount 5,000-10 crore 3 months-3 years
Bank of Baroda 11.6%* 0.5% of loan amount 25,000-10 lakh Upto 1 year
Oriental Bank of Commerce 10.15% 0.5% of loan amount Upto 50 lakh Upto 1 year
State Bank of India 9.65% 0.5% of loan amount 20,000-20 lakh Upto 3 years
Canara Bank 11.90% Rs 1,000-5,000 10,000-10 lakh Upto 1 year
Axis Bank 15%-17.5% 1% of loan amount 25,001-20 lakh 6 months- 3 years
Yes Bank 9.7%-15.7% 0.75% of loan amount 25,000-50 lakh Upto 3 years
Bandhan Bank 10.99%-18% 1% of loan amount 10,000 onwards 6 months- 3 years
Kotak Mahindra Bank 10.5%-17% Upto 2% of loan amount 25,000-25 lakh 3 months-3 years

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Tinesh Bhasin in Mumbai
Source: source
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