Gold Loan

Are you going through a monetarily-challenging time and need funds to manage your finances? If so, the best way to address a cash crunch without dipping into your lifelong savings is through a gold loan. A gold loan is a secured loan offered by banks and non-banking financial companies. You can avail yourself of a gold loan by pledging your gold as collateral. The best part is that it serves multiple purposes, which means that there is no restriction on the end-use of the sanctioned gold loan amount.


The loan amount primarily depends on the value of the gold in the market. Most gold lenders offer between 60% to 70% of the gold’s value as a loan. Depending on your gold jewellery, you can get up to Rs. 50,00,000/- as a loan. Compared to unsecured loans, gold loan interest rate are lower, due to which you can easily make timely repayments.  


Benefits of a loan against gold 

A gold loan comes with several benefits you can avail yourself of, such as: 


  • Quick approval and disbursal 

When you are going through a financially difficult time and need funds immediately, you do not have enough time to undergo a lengthy application process.  But, a gold loan offered by banks and non-banking financial institutions comes with quick approval and disbursal processes. 

You will need to fill in an easy application form and submit the documents required to apply for a loan. After that, the lender assesses the value of the gold you have pledged. If the lender finds everything in proper order, your loan application will receive approval instantly. Generally, the sanctioned loan amount is disbursed within 30 minutes. 


  • Gold loan calculator to determine eligibility 

Every lender has a gold loan calculator on their websites that you can use to determine your affordability. It enables you to assess the loan amount based on the value of the gold, such as the weight and purity of the gold. 

While performing calculations on the gold loan calculator, be mindful of the following factors:

The gold jewellery must not have a purity level lower than 18 karats. 

The gold weight mentioned in the gold loan calculator must be accurate. 

The gold rate depends on the day you are inquiring. The price you see on the calculator is for that particular day. 


  • Minimum documentation

To get an unsecured loan, like a personal loan, you will need to go through several formalities and documentation processes. For instance, you will need to prepare and submit identification papers and other documents like Income Tax proof, income proof, etc. On top of that, arranging such documents can take a lot of time. 

As with a gold loan, the documents involved are a bare minimum. As long as you are the legal owner of the gold, you can easily get a gold loan. The lender may ask for KYC documents to submit along with the application.


  • Low credit score 

It is worth noting that the CIBIL score does not significantly influence the gold loan application. Since gold jewellery is pledged as collateral, lenders are hardly interested in having an excellent credit score. You can get a loan against gold even if you have a low credit score. Unlike other loans, a gold loan has no requirement of maintaining a minimum CIBIL score of 750. 

The risk for the lender is low, as they are sure of getting the loan amount if you fail to repay the loan amount with interest.  That is why lenders do not hesitate to offer loans to borrowers with a low credit score. 


  • Repayment options

Another benefit of a loan against gold is several repayment options available. For instance, you can opt for equated monthly instalments, bullet payments, upfront interest, and overdraft facilities. EMI is a repayment option that allows you to pay a percentage of the principal loan amount and interest rate every month. A bullet payment option enables you to pay the entire loan amount with interest at the end of the repayment tenure.  

Upfront interest means that you will have to pay the entire interest after getting approved for a loan and the principal amount at the time of loan maturity. As with the overdraft facility, it requires you to pay interest only on the utilized loan amount. 



The gold loan has been gaining tremendous popularity among borrows. Much of its popularity stems from quick approval and disbursal, flexible repayment options, extended loan tenure, no processing fees, etc.

By Russell Crowe

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