When you need urgent funds without selling your assets, a gold loan is one of the fastest and cheapest financing options in India. By pledging gold jewelry, you can unlock instant cash while retaining ownership of your gold.
This guide explains gold loan interest rates, eligibility, process, pros, cons, and when a gold loan is better than selling gold.
What Is a Gold Loan?
A gold loan is a secured loan where you pledge gold jewelry (minimum 18K purity) as collateral to receive funds from a bank or NBFC. Once the loan is repaid, the gold is returned to you safely.
Gold Loan Interest Rates in India (2026)
- Interest rates typically range between 8% to 12.5% per annum
- Rates are lower than personal loans and credit cards
- Offered by RBI-regulated banks and NBFCs
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Gold Loan Eligibility & Loan Amount
- Minimum purity: 18K gold
- Loan-to-Value (LTV): Up to 75% of gold value
- No income proof required
- Minimal KYC (Aadhaar + PAN)
Example:
If your gold value is ₹2,00,000 → You can get up to ₹1,50,000 as a loan.
Gold Loan Application Process (Step-by-Step)
- Visit an RBI-registered lender or verified platform
- Gold purity checked using XRF machine
- Loan amount calculated at current gold rate
- KYC verification
- Funds credited within hours
Advantages of Taking a Gold Loan
- Lower interest than unsecured loans
- No impact on CIBIL score if repaid on time
- Flexible repayment options
- Gold remains your property
- Same-day disbursal
Risks & Things to Watch Out For
- Longer tenure increases total interest paid
- Missed payments can lead to auction
- Always check foreclosure charges (if any)
When Is a Gold Loan the Best Option?
- Short-term cash needs
- Business working capital
- Medical or emergency expenses
- When you expect gold prices to rise
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References (Outward Links)
- Reserve Bank of India – Gold Loan Regulations
https://www.rbi.org.in - India Bullion & Jewellers Association – Gold Rates
https://ibjarates.com