Overview Features & Benefits Eligibility Criteria Documentation Q & A


Gold loan (also called loan against gold) is a secured loan taken by the borrower from a lender by pledging their gold articles (within a range of 18-24 carats) as collateral to meet their immediate or long-term cash demands.The loan amount provided is a certain percentage of the gold, typically up to 80%, based on the current market value and quality of gold.

The gold loan is one of the simplest and quickest ways to get money when you need it.The gold loan may be your best financial option, even if you have lots of unused gold in your safe but a low credit score.

Features & Benefits

1. Attractive interest rates
2. No credit score & income proof requirements
3. Safety of the pledged gold
4. Loan-to-value (LTV)
5. Minimal paperwork
6. Versatile end usage
7. Faster processing
8. Zero foreclosure or prepayment charges

Eligibility Criteria

* The age limit for applying for gold loans starts at 18 years old. Gold loans are given up to the applicant's age of 70.
* A salaried or self-employed business owner or farmer can apply for a gold loan. So can a business owner, entrepreneur, student, homemaker and pension-holder.
* The quality of gold kept as security can be either 18-22 karats or 24 carats if it is a gold coin (up to 50 Gms per borrower) only gold jewellery is accepted by most organizations for a loan.


* Identity proof - Any one of the following:
PAN card,Driving License , Passport , Voter's ID card , Aadhar Card

* Address proof - Any one of the following
Voter's ID card , Aadhar Card, Rental agreement, Utility Bills, Bank Statement

*Terms and conditions apply. Gold Loan at the sole discretion of Banks/NBFCs. Loan disbursal is subject to documentation and verification as per Banks requirement.

Frequently Asked Questions

1) How does a gold loan work?
The entire gold loan process is very comparable to other secured loans. In this scenario, you deliver your gold items and the necessary paperwork to a lender. The lender assesses the gold items and examines the submitted paperwork. The lender approves the loan amount based on the evaluations. According to the loan agreement, you repay the principal and interest payments and receive the returned gold items.

2) What is the interest rate on which lenders give the gold loan?
The interest rates charged on these loans vary from one lender to another and rely on a number of variables, including the term of the loan, its size, etc. Also, it depends on where you are borrowing the gold from a bank or an NBFC. Since a loan given against gold is secured, it has a lower interest rate as compare to unsecured loans.

3)What are the rules for gold loan?
The purity of gold provided as collateral should be between 18K and 22K. Typically, most banks provide Gold Loans for a maximum loan to value ratio of 75% of the current market price of the gold. So, if you end up mortgaging gold worth ? 100,000; the maximum loan amount you can get is ? 75,000.

4) What is the time limit of gold loan?
Typically Gold Loan maximum tenure for repayment is 24 months in case of long-term loans repaid in EMIs, and six months in case of short-term loans repaid in a lump sum. If you opt for monthly instalments, you can repay the loan in a maximum of 24 payments.

5) What happens if gold loan is not paid?
If they don't pay the interest on the loan by the deadline, the lender may impose penalties. After numerous follow-ups over the time period specified by the bank, if the Gold Loan amount is still unpaid, the bank will eventually liquidate or auction the gold jewellery in order to recover its losses.

RBI Guidelines On LTV Ratios For Gold Loans The RBI guidelines for gold loans allow lenders, whether banks or NBFCs, to lend up to 90% of the gold jewellery value. The only strict criteria for a gold jewellery loan was that an individual could not use it for agricultural purposes.

6) Can I take two gold loans?
There is no restriction on the number of times you can opt for a loan amount against your gold.

7) Is gold loan beneficial?
Gold loans come with flexible repayment options, where borrowers can choose to only pay interest initially, and pay the remaining amount at the end of the loan term. Banking institutions and gold loan companies also don't apply foreclosure penalties, which makes gold loans even more attractive.

8) What is the difference between gold loan and normal loan?
Gold loans are secured loans and, therefore, attract a lower interest rate. However, personal loans, being unsecured loans, have a higher interest rate than gold loans. Further, gold loans attract lower processing fees and other charges while these charges are relatively higher in personal loans.

10) Is gold loan fixed or floating?
The rate of interest on gold loans is typically fixed at the time of availing the loan. Lenders offer a wide range of interest rates on a gold loan. All this depends on several factors.

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