Loan against gold: Key details to know before borrowing
30 March, 2025 | 12:50 IST
Your gold jewellery can do more than just sit in your locker, it can get you quick cash when needed. A loan against gold lets you borrow money by using it as security. Once you repay, you get it back. A gold loan is a simple and smart option for many reasons – an emergency, a big purchase, or just some extra funds.
A loan on gold jewellery is a secured loan where you pledge your gold as collateral to a bank or financial institution. In return, you receive a loan amount based on the value of the gold. Once you repay the loan with interest, you get your gold back.
Anyone who owns gold jewellery can apply for a loan on gold. You must be at least 18 years old and provide basic documents such as identity proof and address proof.
If you are looking to avail an instant loan, you can explore multiple offers on digital lending platforms like Moneycontrol. Through the Moneycontrol app and website, you can apply for personal loans up to Rs 50 lakhs from eight lenders. The loan interest rates start at as low as 10.5% per annum. The completely paperless process ensures quick approval and disbursement.
Eligibility criteria
Must be an Indian citizen.
Minimum age: 18 years.
Must own gold jewellery (not gold coins or bars in some cases).
Should have basic KYC documents (Aadhaar, PAN, Voter ID, etc).
How to apply for a loan on gold jewellery?
Visit a bank or NBFC: Go to a lender that offers gold loans.
Gold valuation: The lender will check the purity and weight of the gold.
Loan approval: Based on the valuation, the loan amount is sanctioned.
Receive money: After signing the agreement, you get the money in your bank account or as cash.
Documents required for a gold loan
Identity proof (Aadhaar card, PAN card, voter ID, passport)
Address proof (utility bill, ration card, bank statement)
Passport-sized photographs
Interest rates and charges on gold loans
These are the factors likely to affect the gold jewellery loan interest rates:
Higher loans may have lower interest rates.
Banks and NBFCs have different rates.
Shorter tenure loans may have higher interest rates.
Higher loan-to-value ratios may attract higher interest rates.
Other charges
Processing fees: 0.5% to 2% of the loan amount.
Valuation charges: Some lenders charge a fee for assessing gold purity.
Prepayment charges: Some lenders impose a fee for early repayment.
Penalties for late payment: Can vary between lenders.
Things to consider before taking a gold loan
Interest rate: Compare interest rates from different lenders.
Processing fees: Some lenders charge a small processing fee.
Repayment terms: Choose a repayment plan that suits your financial situation.
Gold safety: Ensure the lender has secure storage facilities for your gold.
Hidden charges: Read the fine print before signing the loan agreement.
Loan-to-value (LTV) ratio: RBI allows lenders to offer up to 75% of the gold’s market value.
Gold loan vs personal loan: Which is better?
A gold loan is secured with gold jewellery, while a personal loan is unsecured. This makes gold loans cheaper (9% to 18% interest per annum) than personal loans (10% to 24% interest per annum). Approval is also faster for gold loans since no credit score check is needed. The loan amount in a gold loan depends on your gold’s value, while a personal loan is based on your credit score.
Conclusion
A loan on gold jewellery is a quick and easy way to get cash with lower interest rates. Borrow only what you can repay to keep your gold safe. Compare lenders and read terms carefully before applying. Moneycontrol’s online platform offers personal loans up to ₹50 lakhs from eight lenders, with interest rates starting at 10.5% per annum. The entire process is 100% digital, which ensures a quick disbursement.
Summary
A gold loan is a quick and secure way to access cash by pledging your gold jewellery. With minimal paperwork, fast approvals, and lower interest rates than personal loans, it can be an ideal option for urgent financial needs.
Disclaimer
This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.
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