Gold Loan
What is Gold Loan?
A gold loan is a secured loan wherein borrowers pledge their gold ornaments or jewellery as collateral to avail funds from banks or NBFCs. The loan amount is typically a percentage of the gold's market value, assessed by the lender after purity verification. Gold loans are popular for meeting short-term financial needs due to quick processing and lower interest rates compared to unsecured loans.
Features and Benefits of Gold Loan
Gold loans offer several advantages for borrowers who need quick funds:
- Low Interest Rate: Gold loans usually carry lower interest rates than personal loans since they are secured against gold collateral.
- Low Processing Fee: Most lenders charge minimal or nominal processing fees on gold loans.
- Minimal Documentation: Basic KYC documents are sufficient — no extensive income proof required in most cases.
- No Credit Score Check: Many gold loan providers do not mandate a high credit score for approval.
- Quick Processing: Loan disbursal can happen within a few hours after gold valuation and document verification.
- Varied Usage: Funds can be used for business, medical emergencies, education, weddings or any legitimate personal need.
Gold Loan Interest Rates offered by Various Lenders
| Lenders | Interest Rate |
|---|---|
| Kotak Mahindra Bank | Bank — Starting from 8% p.a.; Loan amount up to ₹1.5 crore |
| Yes Bank | Bank — 7.25% p.a. (some sources mention 9.65%–15.65% p.a. depending on the scheme) |
| Bandhan Bank | Bank — 8.08%–19.49% p.a. |
| HDFC Bank | Bank — 9.00%–10.00% p.a. |
| ICICI Bank | Bank — 9.25% p.a. onwards; Loan amount up to ₹2 crore |
| Bajaj Finance (Bajaj Finserv) | NBFC — Starting from 9.48% p.a.; Up to 85% LTV (some sources mention 12.99% p.a. onwards) |
| Tata Capital | NBFC — 10.99% p.a. onwards |
| L&T Finance | NBFC — Starting from 10.75% p.a.; Loan amount up to ₹1 crore |
| IDFC FIRST Bank | Bank — Starting from 11.00% p.a.; Loan amount up to ₹50 lakh |
| Axis Bank | Bank — 12.50% p.a. onwards (MSME Gold Overdraft product offers up to 82% LTV) |
| Poonawalla Fincorp | NBFC — 11.00% p.a. onwards |
| IndusInd Bank | Bank — Interest rate not separately published; Gold loans available up to ₹1 crore |
Rates as of 6 June 2026
Gold Loan Eligibility and Documentation
Compared to unsecured lending products, eligibility for gold loans is surprisingly straightforward because the loan is entirely secured against your gold; banks and NBFCs don't have to go deeply into your credit history or income history. A gold loan can be applied for by any Indian resident who is at least eighteen years old and has gold jewelry or decorations of a suitable purity. Most of the time, there is no upper age limit for gold loans; however, some lenders cap eligibility at 70–75 years old or need a co-applicant who is older.
Who is eligible for a gold loan?
The eligibility criteria are broadly the same whether you're salaried or self-employed:
- Gold loan for salaried individuals: Salaried workers can apply with simple KYC and ownership documentation of the gold being pledged, regardless of whether they are employed by the government, the public sector, or the private sector.
- Gold loan for self-employed: Since the loan is not dependent on business turnover or profit filings, professionals, freelancers, merchants, and business owners can apply with equal ease.
The fact that you may obtain a gold loan without proof of income or a pay stub is one of the product's main selling points because your gold, rather than your monthly salary, serves as the lender's actual security. In a similar vein, this is one of the few loan options that actually allows for a gold loan without a CIBIL score. Since acceptance is based on gold valuation rather than your credit report, even candidates with a bad credit history or no credit history at all can pledge gold and get payments. However, timely repayment of your gold loan is reported to credit bureaus, so over time, regular payments can assist in improving or raising your CIBIL score.
What type of gold is accepted as collateral?
Not all gold is treated equally when it comes to loan eligibility; purity and form matter. Banks and NBFCs typically accept loans against gold jewelry and ornaments with purity ranging from 18 to 24 carats of gold. This includes items like bangles, necklaces, rings, chains, and earrings.
- A gold loan on 22-carat gold is the most common scenario, since most Indian jewelry is crafted at this purity level.
- A gold loan on 24-carat gold applies mainly to bank-issued gold coins, and even then, most lenders cap the eligible coin weight (commonly up to 50 grams per customer).
- A gold loan on gold coins issued by banks may be accepted, subject to individual lender policy; coins purchased from jewelers or non-bank sources are usually not eligible.
Old or worn ornaments that are left unused at home can still be pledged because damaged or broken gold jewelry is typically accepted after adequate assessment. However, only the net gold weight is appraised, meaning your loan amount is based solely on the actual gold content, not the entire piece; non-gold goods, gold-plated jewelry, and any stones or gems embedded in the ornament are not included in the loan calculation.
Documents Required to Apply For Gold Loan
Since gold loans don't need income documentation, the paperwork here is minimal and mostly limited to KYC. Keep these gold loan documents required ready when applying:
- Proof of Identity (gold loan identity proof): PAN Card, Aadhaar Card, Passport, Voter ID, or Driving License
- Proof of Address (gold loan address proof): Aadhaar Card, recent Utility Bill, Passport, or Rental Agreement
- A recent photograph of the applicant
This is truly a gold loan without an income document process from beginning to end because you don't need any salary slips, ITRs, bank statements, or business proof documents. The speedy disbursement of gold loans, often within an hour of gold valuation after the gold loan KYC documents are validated at the branch or during a doorstep pickup, is largely due to this minimum, KYC-only documentation.
How to Apply for Gold Loan?
Applying for a gold loan is simple and can be done online or by visiting a branch. Follow these steps:
- Step 1: Compare gold loan offers from multiple banks and NBFCs on Bikesh Finserv and shortlist the best rate.
- Step 2: Fill in the application form with your personal details and the approximate weight of gold you wish to pledge.
- Step 3: Visit the lender branch or schedule a doorstep visit for gold valuation and purity assessment.
- Step 4: Submit KYC documents — identity proof, address proof and a recent photograph.
- Step 5: Review the loan amount, interest rate and tenure offered based on the gold valuation.
- Step 6: Sign the loan agreement and receive disbursal to your bank account — often on the same day.
After you apply, a representative from the lender may contact you to schedule gold pickup or branch visit for valuation and disbursal.
Things to Know before Applying for Gold Loan
Before you apply for gold loan, here are few important things to understand:
- Loan to Value Ratio: The LTV Ratio is the loan amount that you can get against your gold article that you wish to put as collateral. Previously, the LTV was up to 75% but during COVID-19 pandemic, RBI increased this limit to 90%. This means if your gold ornament is worth Rs. 2 Lakhs, you can get a loan of up to Rs. 1,80,000 against it.
- Safety of Your Gold Item: Once you deposit your gold item as collateral with the bank/NBFC, they keep it in a safe vault. However, you must ask your lender about the same to ensure the safety of your precious jewellery or coin.
- Defaulting on Gold Loan: You must repay your gold loan on time. If you default on your loan, the bank/NBFC has the right to seize your gold item or sell the same to recover the loan amount.
It is important to do your research before applying for a gold loan. Check the list of lenders and the interest rates charged by them. Also, check other fees and charges such as foreclosure charge and processing fee and then make a decision.
Gold Loan Repayment
Unlike other loans wherein you have to pay a certain portion of the interest and principal every month in the form of EMI, Gold Loan Repayment comes in many forms.
- Bullet Repayment: In the Bullet Repayment method, you have to repay the entire amount of both the principal and interest amount at the end of the loan's term. The interest is calculated each month, however its payment (along with principal repayment) becomes due only at the end of the term.
- Pay Interest as EMI & Principal Later: You can choose this option to repay the interest amount as per the EMI schedule of the gold loan. However, the principal amount borrowed is to be paid, in full, at the time of maturity.
- Regular EMI: As the name suggests, the regular EMIs would include portions of interest and principal, which you will have to pay every month.
- Partial Payments: Under this gold loan repayment method, you can make payment of interest and principal amount as and when you desire without conforming to a set EMI schedule.
FAQs on Gold Loan
What type of gold jewelry or coin is accepted as collateral for a gold loan?
Ans. A variety of gold jewelry, including rings, necklaces, bangles, chains, earrings, and other decorations made of 18 to 24-carat gold, is accepted as collateral by the majority of banks and NBFCs. It is also possible to get a gold loan on gold coins, but only for coins issued by banks themselves, which are typically limited to a certain weight (normally up to 50 grams per client); gold bars and coins purchased from jewelers are typically not accepted. Your gold loan valuation and final loan amount are based solely on the net gold weight, not the entire item, so if your gold decorations are studded with valuable or semi-precious jewels, the appraisal completely ignores the value of these stones.
What happens to the gold ornaments I use as collateral?
Ans. After being pledged, your gold coins or jewelry are placed with the bank or NBFC and kept safe in a vault with round-the-clock security and CCTV monitoring. Before choosing a secured gold loan, borrowers frequently worry about this, and lenders must uphold stringent custody requirements for pledged gold. When you have fully paid back the principal and interest on your loan, whether via bullet payback, EMI, or another plan of your choosing, you receive your gold back.
Who decides the value of the gold I intend to use as collateral?
Ans. Before determining the value of your gold, the majority of banks and NBFCs use in-house qualified assessors to determine its purity and net weight. This procedure is known as gold loan purity and gold loan valuation checks. This evaluator's estimate and the gold rate in effect on the day of valuation, applied within the lender's authorized gold loan LTV ratio, determine your final loan eligibility. The same jewelry may fetch a slightly different loan amount depending on when you apply because gold prices are subject to daily fluctuations. Therefore, timing your application around a favorable gold rate may work to your advantage.
Is there an option for prepayment in case of a gold loan?
Ans. Indeed, the majority of lenders let gold loans default and prepay before the loan term expires, and many banks, especially those in the public sector, do not impose any penalties for doing so. Before signing the loan agreement, it's important to review the terms of your particular lender because some private banks and NBFCs do impose a prepayment tax, which usually ranges from a tiny percentage to the outstanding principal. Verifying the foreclosure policy up front will help you avoid unforeseen expenses if you intend to terminate your gold loan early in order to get your jewelry back sooner.
I do not have a decent credit score. Can I still get a gold loan?
Ans. Since the loan is entirely guaranteed by your pledged gold rather than your creditworthiness, it is indeed possible to obtain a gold loan without a CIBIL score. This makes eligibility for gold loans simple: even applicants with a low credit score or a history of missed repayments elsewhere can be approved as long as they possess gold of sufficient purity and can produce minimal KYC documentation. However, since your gold loan repayment habits are recorded to credit bureaus, working overtime transforms this loan from a source of emergency funds to a chance to improve your credit profile.
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