For a long part in 2024, gold have hogged headlines by the virtue of the long rally in its prices. The prices of a gram of 24 carat gold has risen from about Rs 6,397 on January 1, 2024 to Rs 8,166 on November 11, 2024. This stupendous rise has also made it easier to secure a bigger amount as loan by pawning gold.
One has to remember that apart from the interest rate that a bank charges on gold loans, there are a few additional charges that might be applicable. There are loan processing charges and then there is GST. There are also pre-payment charges. Some bank might charge credit appraisal charges. If EMI payments are dishonoured, or if cheques bounce, there will be additional charges.
Which bank is best for gold loans?
There is no direct answer to the question, “Which bank is best for gold loans?” One of the key considerations is the interest rates that different banks charge of gold loans. Some of the top banks charge the following interest rates:
State Bank of India (SBI): 10.20% (EMI based); 9.45% (12 months bullet repayment); 9.05% (3 months bullet repayment)
HDFC Bank: 11.91% (Average rate charged in Q2, FY25)
ICICI Bank: 11.82% (Average rate charged in Q2, FY25)
Bandhan Bank: 8.45% (Minimum charge) Mean rate 14.97% in April-June 2024
Kotak Mahindra Bank: 8%-17%
How much gold loan per 10 gram?
The amount of loan that you can get for 10 grams, or for that matter, any quantity of gold, depends on a few factors which you have to understand clearly. The first point is the purity if the gold. For simplicity’s sake, let’s take it as 22 carat. The second point is, what is the LTV (loan-to-value) ratio? The LTV is fixed by the Reserve Bank of India or RBI and it represents the maximum amount of gold loan that can be obtained against the value of the metal being pawned. This value is now 75%. It signifies, if the market price of 10 gram of 22-carat gold is Rs 70,000, then if the LTV is 75%, the maximum loan will be of Rs 52,500.
When prices of gold rallies, it is easy to obtain a bigger value in the form of a gold loan than the price of the gold. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
