What is a Gold Loan?
A gold loan lets you pledge gold jewelry as collateral to borrow money. Processing can be as fast as 30 minutes. Loan amount is 60-80% of gold’s market value.
Interest Rates
Rates range from 7% to 17%. SBI offers from 7.50%, while Muthoot Finance and Manappuram start from 12%. Processing fees are minimal at 0.5-1%.
Advantages
Extremely fast processing under an hour, minimal documentation, credit score has less impact, flexible repayment including bullet payment option, and lower rates than personal loans.
Loan-to-Value Ratio
RBI caps LTV at 75% for both banks and NBFCs. Gold valued based on weight and purity, with 24-karat fetching highest value.
Things to Consider
Risk of losing gold on default, choose reputable lender with vault storage, compare rates, understand repayment terms, and check for hidden charges.