Ways to Take Loan Against Gold

Berry Mathew

Ways to Take Loan Against Gold

Taking or getting loans has become simple as ever at the pinnacle of the digital era. But, as for 2023, what do you think are some of the best types of loans you can get? During a cash crunch – you always need some aid, and the best aid that you could get at this time is a reasonable loan. A loan comes in quite handy during times of hardship – one of the most reasonable ways that you can get close to a loan is through gold. Let’s find out how we shall.

Gold Loans

Most Indian households have gold items sitting idle in their lockers. The good news is that they can be put to good use when you need them. When you are in desperate need of money, you can use your gold articles to meet your immediate financial needs. 

Not by selling your gold but by pledging it to a lender. Various banks and non-banking financial companies (NBFCs) in India provide gold loans to their customers at competitive interest rates.


Your Takeaway from Gold Loans (The Perks)

  • Faster processing – Because gold loans are secured loans, they have fewer eligibility requirements and require less documentation. Loan approvals do not even require a credit score. As a result, lenders typically disburse loans within a few hours. People who qualify for an online gold loan can receive the loan amount in as little as a few minutes.
  • Income proof is not required – Because gold loans are secured by gold, lenders rarely ask for income proof. As a result, whether earning or not, anyone can apply for a gold loan.
  • There are no processing fees on gold loans at many banks and NBFCs. If a lender charges processing fees, they are typically 1%.
  • No foreclosure charges – Some lenders do not levy any pre-payment charges, whereas others charge a 1% pre-payment penalty.
  • A credit score is not required – Unlike most loans, the approval of a gold loan is not contingent on your credit score. In the case of other loans, the loan amount is determined by the borrower’s repayment capacity and credit history, whereas the loan amount in the case of a gold loan is determined by the market value of gold.
  • Lower interest rate – Unlike unsecured loans such as personal loans, gold loans, which are secured loans, have a lower interest rate. Furthermore, if another asset is used as collateral, the gold loan interest rate can be reduced even further.
  • Current Gold Loan Prices – Well, when you opt for a gold loan, you get a loan for the current value of your gold. If you reside in Mumbai and you opt for a gold loan there, you can just look up 1 gram gold price in Mumbai – and know that you will be getting this amount as a loan.

How to Get a Gold Loan?

Here is just everything you need to know about getting a loan against your gold jewellery in India, including how to open an account and what documents you’ll need.

Step 1: Choosing the Source

In India, there are numerous finance companies (banks and NBFCs) that provide gold loans against gold jewellery. These institutions charge interest rates ranging from 7 to 29% per year, depending on their credit rating and creditworthiness. It is best to go with a reputable company to start the gold loan process against your valuables because it will save you from the hassles of paperwork and delays in processing your application.

Step 2: A Background Check on Your Gold (Purity)

Once you’ve decided on a gold loan provider, they’ll start by verifying the purity of your gold at the institution’s physical branch or your home with their jewellery experts. The person in charge of your gold loan should ensure that it is at least 18 karats pure.

Step 3: Getting Those Papers In-Line

A PAN Card, Aadhar Card, Driver’s License, or any other document proving your identity and address would be required. In the absence of collateral, you must submit affidavits or sufficient guarantors from three people guaranteeing your loan repayment. Your loan application will be approved once the documents have been verified. Gold loans of up to 80% of the calculated value of the pledged gold can be approved.

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Getting It Done Online!

Most gold loan providers allow you to apply for a loan either online or through their mobile applications. You can apply for this by filling out an application with basic information about yourself, your financial situation, your existing relationship with the bank, and your jewellery, including the type and purity of gold (24k, 18k, 14k, and so on), the weight of each piece, and an approximate value.

To verify and deposit your items, you may need to upload photos or bring them to their physical branch. Once approved, you should have the funds in your bank account within 24 hours.

Are there Any Drawbacks?

Every coin has two sides, and you can’t be left only knowing one side of it – so, here we can look at both sides of opting for a gold loan.

  • Loan-to-Value Ratio – The loan amount in a gold loan is a percentage of the market value of the pledged gold. The loan amount is determined by the LTV (Loan to Value) ratio. This ratio varies by lender and can reach up to 80% of the value of the pledged gold. This means that if your gold is worth Rs. 5 lakhs in the market, you can only get Rs. 4 lakhs.
  • You may lose your gold as a result of a loan default – In the event of a gold loan default, lenders have the legal right to seize your assets and sell them at auction to recover the outstanding gold loan amount.


This article doesn’t just tell you how to apply for a gold loan, it also tells you the good parts and some of the bad parts of opting for one. When you want to enjoy those perks, and you are ready for the demerits that come along – what is the wait for? Go ahead and apply for one now. It’s big time you opt for a loan from all that gold jewellery that is sitting in your locker.