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Gold Loan

Gold Loan

What is a Gold Loan?

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. The loan amount provided is a certain percentage of the gold, typically upto 80%, based on the current market value and quality of gold.

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What are the benefits of going for a gold loan?

Gold loan is similar to personal loan in meeting your immediate financial requirements, be it an international education, marriage expenses, covering medical emergencies or any other personal use.

  • Quick Disbursal- Minimum documentation leads to faster processing of gold loan due to its secured nature.
  • Flexibility of Use- Since there is no monitoring of the end use, it gives you the flexibility to use the loan for any type of expense.
  • Secured Loan Type: You are not required to submit any other security/collateral to the lender other than the pledged gold ornaments.
  • Lower Interest Rate: Interest rates on gold loans are on the lower side when compared to personal loan, since gold serves as collateral.
  • Liquidate your idle asset: An idle asset, gold is seldom used for generating money. Hence gold loan is the perfect solution to raise capital and use the fund when you require money to meet your financial needs. It is also more secure in the confines of a bank’s or a financial institution’s locker than your home.

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What are the typical interest rates and processing fees?

Interest rates for gold loan varies from lender to lender and ranges from 9.24% to 17%. A nominal processing fee ranging from 1-3% of the loan amount is also charged by some lenders. It is always advisable to check and compare interest rate, processing fee, late payment charges and pre-payment charges with the lender before going for the loan.

Click here to check, compare offers and apply for your loan.

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Which are the documents required to process loan application?

Documents that are required to seek a gold loan vary from lender to lender. However, the common list of documents includes: Passport Size Photographs, Identity proof (PAN Card, Voter’s ID, Aadhar Card etc.) and Address proof (Passport, Driver’s License, Electricity Bill etc.).

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Can I foreclose the loan? Are there any foreclosure charges?

Yes, you can always foreclose the loan at any point of time. Most lenders do not levy foreclosure charges for gold loans, but a few lenders charge between 2-4% of the outstanding principal amount. You can always get in touch with the lender to know the procedure they follow to foreclose.

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What are the tenures for which I can avail the loan?

Gold loans are short-term loans and have a flexible tenure ranging from a minimum of 1 month to 5 years or more depending on the lender.

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What should you look out for?

Since gold loans are secured against your gold, you should be careful about loan repayment and should take loan amount that you actually need and can repay comfortably. Defaulting on loan can adversely affect your credit score and report including cancellation of any future loan application.

Click here to check your loan eligibility, based on which you can take an informed decision.

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What happens if I am unable to clear my dues by the due date?

Action taken on customers who default varies from lender to lender. Some lenders charge interest for the time overdue, which is usually higher than the rate a customer pays for the loan. Further default on loan payment will result in a notice sent to you, informing you of the time within which you will have to clear your obligations. Non-payment of loan by the final notice date can also lead to lenders auctioning your gold articles to recover their outstanding loan amount.

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Document Checklist

Latest Credit Score & CIR*
Bank Statement
KYC docs (identity, signature & address proof)
Registration Papers   
Income Statement (such as salary slip)
Property Papers   
Last 3 years IT return ✓
(for self-employed only)
(for self-employed only)

* This is an indicative list and may differ from lender to lender.

Loan Eligibility Calculator