The State Bank of India is one of the popular banks in India that provides a loan against gold. The interest rates may differ. The standard interest rate ranges between 10.25% and 11.75%, but it can fluctuate as per the current rateinterest rate and several other factors. The interest rates may differ depending on the customers, their needs, and the purposes of the credit. The SBI gold loan interest rate and gold loan scheme information, along with what is essential to apply for the loan, are all compiled and mentioned below.

Table of Content

  1. Types of SBI Gold Loan and Interest Rates
  2. Application Process for a Loan against Gold
  3. How to Calculate the Interest Rate of SBI Gold Loan?
  4. Repayment Options
  5. Charges and Fees
  6. Documents Required

1. Types of SBI Gold Loan and Interest Rates

Below given is information on gold loan SBI and its interest rate.

  • Gold Loan Schemes: The State Bank gives loans against gold to anyone above 18 years of age. Employment and income proof are not a constraint. The applicant must not submit a salary slip, income tax proof, etc. Women customers can get more concession on interest rates if the loan is used for business purposes. Similarly, farmers and agriculturists can get a concessional interest rate on the gold loan.
  • Agriculturists must provide proof of farming activity and evidence of ownership of the agricultural land. The end use of the loan must be mentioned by the borrower. In all cases, the gold pledged must be kept with the bank, and returned after the loan is repaid, along with the interest and principal component.
  • Interest Rates: Two types of interest rates are fixed and floating. In most long-term loans, primarily secured, a floating rate may be charged. In such cases, the rates may change per the directives of the RBI or the bank. However, when it comes to a loan against gold, the fixed interest rate is charged, as the loan, though secured, is short-term. Here, the rates do not change over time but remain the same.

2. Application Process for a Loan against Gold

You can apply for a State Bank of India gold loan at the branch office. The customer representative will provide the application form and explain all the essentials. You must complete and sign it before submitting it to the bank with the necessary documents. You will be told the exact loan amount that can be provided. You will be notified of the same loan amount that can be provided. After the application is approved, the gold to be pledged will be evaluated.

Once there is an agreement and the loan process is completed, the amount will be disbursed to your bank account. You can also apply for a gold loan online at the bank’s website. However, you will have to visit the bank for a gold evaluation.

3. How to Calculate the Interest Rate of SBI Gold Loan?

The bank’s lowest interest rate for a gold loan is 10.25%. Several factors influence this rate and are used to calculate the exact interest rate for a loan. The existing account holders of State Bank may receive some concession in the rates against other customers.
  • Relationship with SBI: Special rates and charges could be offered to the existing customers of SBI. Those who made one-time payments on time may benefit from a lower interest rate than the standard.
  • Loan Tenure: Lower tenure may apply a higher interest rate and vice-versa. The minimum mandate is 3 months. The minimum order is 3 months. At SBI, the maximum term for a gold loan is 36 months.
  • Loan Amount: The gold loan amount depends on the jewelry’s weight that you pledge with the State Bank. Usually, SBI will offer a loan per gram of gold. But the amount will also depend on the purity of the metal and the loan-to-value ratio (LTV). You can borrow between Rs. 20,000 and Rs. 20 lakhs. Lower rates may apply for loans of higher amounts. Lower rates may apply for loans of higher doses.
  • Loan to Value Ratio: Banks usually offer up to 75 percent of the gold ornament’s current value. This amount is calculated, leaving out the tax or service charges taken when the decorations were first purchased. SBI may offer funds at a lower LTV than 75% as well. The interest rate on funds with a lower LTV will be lower than on loans with a higher LTV.
  • Purpose of the Funds: The State Bank of India offers gold loans for various purposes, including agriculture. Agricultural loans come at concessional rates, as these loans are among the priority sector lending targets by the bank. The interest rate is lowered by 1 to 2 percent more than that charged to regular customers.

4. Repayment Options

The State Bank of India offers various gold loan schemes to meet your financial requirements. Each project may have a particular interest rate and repayment option, as mentioned below.
  • Standard EMI: In a regular EMI scheme, you must repay part of the monthly loan amount. Equated monthly installments of this type comprise both interest and principal components. By the end of the loan tenure, you will complete the repayment.
  • Bullet Repayment: Here, you can pay the total principal amount at the end of the loan’s tenure. Thus, your monthly payments would be lower since those will comprise only the interest component, reducing the loan burden significantly. Such a repayment option is more common for a short-term loan against gold.

5. Charges and Fees

 Other than interest rates, the bank may apply some charges when offering a loan against gold.
  • Foreclosure or Prepayment: SBI permits prepayment of the gold loan but does not apply any charges for the same.
  • Processing Fees: A minimum of 0.5% of the loan amount is taken as a processing fee, or the lowest amount is Rs. 500.

6. Documents Required

The documents needed for a loan against gold at the bank are kept to a minimum. You can submit one proof of address and identity. You can submit a rent agreement, bank statement, utility bill, Aadhar Card, or Voter ID card for address proof. You can submit a rent agreement, bank statement, utility bill, Aadhar Card, or Voter ID card for address proof.  a PAN card is necessary for identity proof, but you can also present a passport, Driving License, Aadhar Card, or voter ID Card. You will also have to provide 2-3 recent passport-size photographs of yourself.

Above-given information will help you understand the different interest rates on gold loans by the SBI and what factors influence the same.