Why the Lowest Interest Rate Doesn't Always Mean Cheapest
Borrowers often focus exclusively on the advertised interest rate, but upfront processing fees and appraiser charges can distort the actual cost. For short-tenure gold loans (e.g. 3 to 6 months), a 1.5% processing fee can add the equivalent of an additional 3–6% annualized cost!
Always inspect the Effective Annual Rate (EAR) or Total Cost of Borrowing, which our calculator computes above.
Public Sector Banks vs Private Banks vs NBFCs
- PSU Banks (SBI, BOB, PNB): Lowest interest rates (7.3% to 9.5%), lowest fees, but slightly longer documentation times (1–2 days).
- Private Banks (HDFC, ICICI, Axis): Moderate rates (9.5% to 14%), same-day processing for existing bank customers.
- NBFCs (Muthoot, Manappuram, IIFL): Fastest disbursal (under 30 minutes) and minimal documentation, but higher interest rates (12% to 24%).