Bank of India, Punjab & Sind Bank offer the cheapest gold loans
Interest rates on gold loans from banks start at 7 percent, but NBFC loans are far more expensive
December 29, 2020 / 10:22 AM IST
The year 2020 has been amongst the toughest for people’s health and finances across the world. The COVID-19 pandemic has spared no one, irrespective of age and financial status.
Many ended up taking personal loans and revolving credit card debt to tide over the economic crisis, ending up in a debt trap in the process. If your New Year resolution is to get out of it in the year 2021, you must start with retiring high-cost debt. Personal loans and credit cards come with exorbitant interest rates, as these are unsecured debt. To reduce your overall loan burden, you must look at liquidating your investments. If that is not possible or is not enough, you can also consider taking lower cost loans to reduce your interest payable.
Gold is one such asset that can come to your aid in times such as these. Punjab & Sind Bank offers interest rate of 7 percent on a gold loan of Rs 5 lakh, with a repayment tenure of three years, as per data from Bankbazaar. Bank of the India (BoI) is the second on the list of cheapest lenders, charging an interest rate of 7.35 percent. The country’s largest bank, government-owned behemoth State Bank of India (SBI), offers gold loans at an interest rate of 7.5 percent.
Non-banking financial companies (NBFCs) that are highly active in this space offer loans at comparatively higher rates. IIFL Finance’s gold loans come at an interest of 9.24 percent, which is the cheapest amongst NBFC gold loans. Bajaj Finance’s gold loan rates start at 11 percent, while the two major players in this space – Muthoot and Manappuram – levy interest rates of 11.9 percent and 12 percent, respectively.
Bankbazaar has considered interest rate on gold loans for all listed (BSE) public as well as private banks and selected NBFCs for the data compilation. Banks for which data is not available on their websites have not considered. Data was collected from respective banks’ websites as on 24 Dec 2020. Banks are listed in ascending order on the basis of interest rate i.e. bank/NBFC offering lowest interest rate on gold loan (for various loan amounts) is placed at the top and highest at the bottom. Lowest rate offered by the banks/NBFCs is considered in the table. EMI is calculated on the basis of interest rate mentioned in the table for Rs 5-lakh Loan with tenure of three years (processing and other charges are assumed to be zero for EMI calculation).