Banks and non-banking financial companies (NBFCs) offer gold loans for tenures as short as three months to as long as five years. Interest rates range from 8.8% to 18%, depending on the lender, the purity of the gold, and loan-to-value (LTV) ratio, among other things.
While you don't need a credit history to apply for a gold loan as it is a secured loan (that is, disbursed against collateral), a high credit score can help you secure a slightly lower interest rate.
There is also a processing fee of between 0.25% and 3% of the loan value. While lenders are allowed to offer a loan up to 75% of the value of the gold, they may choose to be more conservative, based on their internal risk-mitigating safeguards.
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