Secured Finance
Gold Loan
A secured loan where eligible gold jewellery or ornaments are pledged as collateral to access funds.
Security
Gold
LTV
Up to 85%
Valuation
Purity & Weight
Lender
Bank / NBFC
Tenure
Product Based
Overview
What is a Gold Loan?
A Gold Loan is a secured loan where eligible gold jewellery, ornaments or other accepted gold are pledged with a regulated lender.
Eligibility
Who Can Apply?
Age
Meet the lender's minimum age requirement.
Gold Ownership
Applicant should have the right to pledge the gold.
Eligible Gold
Gold must meet the lender's purity and eligibility rules.
KYC
Complete required identity and verification checks.
Loan-to-Value
How Much Can You Borrow?
Under the current RBI framework for consumption loans, maximum LTV depends on the total loan amount.
Up to ₹2.5 Lakh
85%
Maximum LTV
₹2.5–5 Lakh
80%
Maximum LTV
Above ₹5 Lakh
75%
Maximum LTV
The actual loan amount may be lower based on lender assessment.
Valuation
How is Gold Valued?
Purity
The actual purity of the gold is assessed.
Net Weight
Only eligible gold content is considered.
Reference Price
Value follows the prescribed methodology.
Stones, gems, making charges and other non-gold components are generally excluded from collateral valuation.
Documentation
Documents Required
Identity Proof
Aadhaar, PAN, passport or accepted KYC.
Address Proof
Accepted address verification documents.
Ownership
Declaration or supporting proof of ownership.
Additional Documents
Income or business documents where required.
Application
How to Apply
Choose
Compare regulated lenders and terms.
Pledge
Submit eligible gold for valuation.
Receive
Get funds after approval and formalities.
Pricing
Interest Rates & Charges
Gold-loan rates vary by lender, loan amount, tenure, repayment structure and borrower profile.
Interest
Processing Fee
Valuation
Penal Charges
Always check the lender's latest Key Facts Statement and loan agreement for the complete borrowing cost.
Repayment
Repayment Options
EMI
Regular principal and interest payments.
Interest Only
Interest payments with principal as agreed.
Bullet
Principal repayment at the end where permitted.
Consumption loans structured as bullet repayment loans are subject to applicable RBI tenure requirements.
Security
Is Your Gold Safe?
Regulated lenders must follow applicable procedures for handling and storing pledged gold. Always verify the gold description, purity, weight and valuation in your documents.
Important
What Happens if You Don't Repay?
The loan may become overdue.
Additional interest or penal charges may apply.
The lender may issue recovery notices.
Gold may ultimately be auctioned after the required process.
Risks
Things to Consider
Default can result in loss of pledged gold.
Interest and penalties can increase the cost.
Short tenure can create repayment pressure.
Gold-price movements may affect LTV requirements.
FAQs
Gold Loan Questions
How is the gold value calculated?+
The lender assesses the purity and net weight of eligible gold using the prescribed valuation method.
What is the maximum LTV?+
For consumption loans, the current maximums are 85%, 80% and 75% depending on the loan amount.
Can I get a gold loan with a low credit score?+
Credit score may be less important than for an unsecured loan, but lenders can still conduct credit and KYC checks.
Can gold coins be pledged?+
Eligible gold coins may be accepted subject to RBI requirements and lender policy.
Can I prepay my gold loan?+
Prepayment may be allowed subject to the loan agreement and applicable regulations.
Conclusion
Borrow Against Gold Carefully
A gold loan can provide convenient secured funding, but the pledged gold is at risk if the loan is not repaid. Compare lenders and understand the complete cost before borrowing.
Choose a regulated lender and borrow within your repayment capacity.
Disclaimer
Gold-loan interest rates, charges, eligibility, accepted collateral, LTV, repayment options and loan amounts vary by lender and may change. Verify the latest terms directly with the lender and review the Key Facts Statement before pledging gold.
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