While the broad rates are indicated remember that you must bargain for the best interest rates. If you have a long relationship with the bank and if you’re CIBIL score is good then you get lower rates and also better LTV ratio. Normally, the rate of interest on Gold loans is comparatively lesser than Personal loans since gold loans are secured while personal loans are unsecured. Normally, NBFCs charge a higher rate of interest compared to banks as they have a higher cost of funds. Ideally, if you have an existing relationship with a bank, you can avail gold from the same bank as you can get better terms. The rate of interest varies between 13-15% in most cases. Don’t pledge gold with jewellers as they may not be very trustworthy.

Then we come to the issue of tenure of the gold loans. It needs to be remembered that gold loans are a short term facility, normally for a period of up to 12 months. It has to be repaid after that period. You can approach your bank to extend the period of the loan for another 1 year based on mutually agreeable terms and conditions. Make sure that you are in a position to repay the loan within the time limit. Gold loans are good in the case of emergencies but there is a major downside. In case you are not able to pay back on time then your gold will be auctioned and normally you end up getting an unfavourable rate for your gold in these circumstances. You can also repay the gold loans earlier although your bank may insist on pre closure charges of up to 1% in such cases.