Gold loans are nothing but a boon to the economy. In the covid hit credit market, when there was a dire need of money at the hands of people and not enough liquidity in the economy, people turned to gold loans as their major source of income. Gold loan refers to the fact of borrowing money against gold articles kept as collateral to the bank. The best part about gold loans is that they can readily and quickly inject liquidity or cash into the hands of people fulfilling their immediate financial needs. It resulted in the violent slashing of interest rates on almost all loans and fixed deposit schemes by banks and raising the collateral requirements by a notch. Despite RBI’s repeated actions like revising repo rates and reverse repo rates, the rates didn’t change much. SBI gold loan interest rates in this regard were the least affected and hence the safest instrument.
Factors that determine SBI gold loan interest rate
Gold loan interest rate is the rate of interest a borrower will be charged for the loan amount, to be returned within the prefixed time period. Understandably then, the lower the interest rate charged, the better suitable will it be for the borrower. SBI gold loan interest rates usually range from 9 to 11.5 per cent p.a. And are based on certain features. These are –
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Annual or monthly income
Your source of income while applying for a gold loan becomes a matter of import. This is because SBI offers two different schemes to different categories of individuals – salaried government employees or self-employed individuals in financial services or business. The interest rate usually varies from 9 per cent to 11.5 per cent p.a.
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Credit score
A good credit score increases your probability of getting the loan amount sanctioned without any complications. A credit score reflects the chances of you defaulting on the loan or how well you have cleared the loan dues over the years. All banks including SBI have a very meticulous eye for a good credit score.
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Repayment method
This is probably the way you choose to clear your loan. Some may opt for monthly EMIs at fixed rates, some may choose to repay it whole at once or some may choose to repay it in quarterly instalments or by taking another loan. The more delay you make in repaying the loan or any process other than a direct transfer of loan amount, may incur additional charges and affect the gold interest rate.
Gold loan interest rates for different categories
- If you are a salaried employee your gold loan rate of interest would be somewhere between 9 to 10.5 per cent p.a. depending upon the principal amount of loan you are willing to seek against your gold ornaments. The time period for repayment is the same for all categories or across all schemes – 7 days to 3 months.
- For NRI citizens the rate of gold loan interest is quite high, around 10 to 12.5 per cent p.a. Along with an enhanced upper limit on gold loan amounts too, up to 2 crores. The time period of repayment is similar, 7 to 90 days.
- They don’t offer any concessions to elderly citizens or businesses. If you have to apply for an SBI gold loan scheme, you need to decide on the amount and state your business and purpose of the gold loan like other individuals only.
How to apply for a gold loan in SBI?
The best way to apply for a gold loan is by visiting the bank’s online portal and filling out the necessary details. Among nationalised banks, SBI offers the lowest interest rates on gold loans. It is always advisable to check your loan to value ratio.
