Gold Loan – Cheaper & better substitutes for personal loans

To buy a home, you can take a home loan, and to buy a vehicle, a car loan. For most other needs, people often assume that their only option is a personal loan. Most consumers are unwilling to take these as they are available at very high rates of interest, usually ranging from 16-22%.

Now, however, public sector banks are offering loans designed for specific spending purposes. These loans are available at lower interest rates than those for personal loans . Here’s a look at the various options that are available to you.

Gold loan: With gold prices scaling new heights, it may not be possible for you to pay a lump sum for an expensive piece of jewellery and create a gaping hole in your monthly family budget. You may find it easier to take a gold loan and pay for it in a staggered manner.

Bank of India’s Star Mahila Gold Loan Scheme and Central Bank of India’s Cent Jewel are two schemes that women can avail of if they want to buy gold and diamond jewellery (hallmarked) or gold coins from banks. You need to produce a stamped receipt or an invoice for the total cost of jewellery and the bank will fund up to 80% of the purchase.

The quantum of loan will be up to 10 times your monthly take-home salary or 50% of the gross annual income, subject to a ceiling of Rs 2 lakh. The minimum amount is Rs 10,000. The repayment tenure can range from 3-5 years.

Consumer durable loan: You can also take a loan to buy consumer durables, such as a refrigerator, cooking range, computer or furniture. The loan amount typically ranges from Rs 10,000-4 lakh and will depend on your net monthly income.

However, Indian Overseas Bank provides a home decor loan of up to Rs 5 lakh at 13% interest to buy carpets or install cupboards. Central Bank of India has a Cent Computer Loan scheme, which can be availed of by students at an interest rate of 15% for buying a computer or laptop. However, the student’s father or guardian will be considered the principal borrower and the computer will have to be insured with the bank.

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