Gold loan is availed to meet urgent cash requirements by putting gold ornaments/jewellery as collateral or security with the bank. The bank charges interest on gold loan and once you pay back the loan amount along with the interest in full, you can take your gold item back. Being a secured loan, the interest rate on gold loan is much lower as compared to other lending products, such as personal loan, business loan or various forms of unsecured credit facilities.
Gold Loan Interest Rates - 2021
| Bank/NBFC | Loan Amount (in Rs.) | Interest Rate | Processing Fee |
| State Bank of India | 20,000 to 50 Lakh | 7.30% p.a. onwards | Nil if applied through YONO app 0.25% of the loan amount |
| Canara Bank | 5,000 to Rs. 20 Lakh | 7.65% p.a. onwards | 0.25% of the loan amount onwards |
| Punjab National Bank | 25,000 to 10 Lakh | 8.75% p.a. onwards | 0.75% of loan amount |
| IIFL Finance | 3,000 to Unlimited | 9.24% p.a. onwards | Dependent on the scheme |
| Rupeek | No limit | 9.69% p.a. onwards | Nil |
| HDFC Bank | 25,000 to Unlimited | 9.90% p.a. onwards | 1.5% of the loan amount |
| ICICI Bank | 10,000 to 1 crore | 11% p.a. onwards | 1% of loan amount |
| Muthoot Finance | 1,500 to Unlimited | 12% p.a. onwards | Shared at time of application |
| Axis Bank | 25,001 to 25 Lakh | 12.50% p.a. onwards | 0.5% of the loan amount |
| Fincare Small Finance Bank | 5,000 to 25 Lakh | 12.99% p.a. onwards | Up to 0.5% of the loan amount |
Note: The mentioned details are subject to change at the sole discretion of the lender. GST and service tax may be levied on the mentioned charges.
Compare Gold Loan EMI Payments using Gold Loan EMI Calculator
Factors that Affect Gold Loan Interest Rate
Factors that affect the interest rate on gold loan are:
Loan Amount – The interest rate that the bank charges you is directly related to the loan amount. Hence, if you require a large loan amount, be ready to pay higher interest on it. To further simplify the point let us take the example of Indian Overseas Bank.
Indian Overseas Bank, as of March 2021, charges the following interest rate on the loan amount.
| Loan Amount Bracket | Interest Rate |
| Up to Rs. 3 Lakh | 7.05% p.a. |
| Between Rs. 3 Lakh & up to Rs. 5 Lakh | 7.70% p.a. |
| Over Rs. 5 lakh | 8.15% p.a. |
Purity & Weight – The quantity and quality of the gold articles affect the maximum gold loan amount that will be given to you. The quality and quantity of the gold articles are checked by a bank nominated appraiser. Note: many banks do not accept gold ornaments that are below 18 k.
Note In the case of jewellery, gold loan is provided against the value of gold in jewellery only. Thus, the bank will not consider the value of precious stones embedded in the gold jewellery in its appraisal. |
Income – Most banks do not ask for income proof from their applicants. However, banks prefer extending a loan to those customers that have a stable source of income.
Lending Rate of Banks – MCLR (Marginal Cost of Fund Based Lending Rate) or RRLLR (Repo Rate Linked Lending Rate) affects the interest rate offered to applicants. Banks that issue gold loan against RRLLR transmit RBI Repo Rate cuts much faster to applicants.
Gold Loan – Eligibility & Documentation
To apply for gold loan, applicants must first get their gold ornaments appraised by a bank nominated appraiser. They also must be above 18 years of age with a steady source of income.
Documents Required
Banks generally ask for the following documents. If there is any other requirement, the bank will share the same at the time of application.
- Application Form
- 2 photographs
- KYC Documents to establish address and identity, income if required
- Witness Letter in case of illiterate borrowers
Some banks ask for additional documents at the time of disbursement, these documents include:
- Demand Promissory Note & Demand Promissory Note Take delivery Letter
- Gold Ornaments Take Delivery Letter
- Arrangement Letter
How to Apply for Gold Loan?
You can apply for gold loan through Paisabazaar. Follow the steps given below:
- Click here to visit our gold loan application page
- Enter the required details and proceed ahead
- Choose the bank or institution from whom you want to apply for the gold loan from
- Follow the on-screen instructions to complete the process
Once you have submitted the form a representative from the bank or NBFC will call you and share further instructions. The representative might visit you to appraise the gold articles or you might be required to visit the bank. The lender will evaluate your gold items and grant the loan accordingly.
Things to Know before Applying for Gold Loan
If you are applying for gold loan for the first time, then you should be aware of the following things:
Maximum Loan Amount – Banks extend a percentage of the value of gold as loan amount. Currently, you can get up to 90% of the value of gold in the gold jewellery as loan amount. However, the bank has the final say on how much loan amount it extends to its applicants. So if the bank appraises your gold articles at Rs. 10,000, then you can get up to Rs. 9,000 as loan amount.
Safety of Your Gold Item – The banks take over the responsibility of safeguarding your gold articles once you submit it with them. Some lenders even insure your gold articles. If you want, you may enquire about the safety measures taken by the bank to safeguard your gold articles.
Loan Payments Default – The bank reserves the right to auction off your gold articles in the event you fail to pay off the loan amount. Hence, you must pay off the amount in a timely manner.
Note We suggest you compare the interest rate and other fees and charges of various banks before applying for a gold loan. If you believe you will be able to pay off the loan amount before the end of tenure then apply for a loan that does not charge a foreclosure fee. |
Gold Loan Repayment Methods
The various methods through which you may pay off your gold loan amount are:
Bullet Repayment | EMI | Partial Payment | Pay Interest as EMI & Principal Later
Bullet Repayment – Under this method you must repay the entire amount, principal and interest, as a lump sum at the end of tenure.
Pay Interest as EMI & Principal Later – Here, You have the option to repay the interest amount per month as EMI. However, the borrowed amount must be paid in full at the end of tenure.
Regular EMI – The due amount, interest and principal, will be divided equally and made payable every month for the full duration of the loan.
Partial Payments – Under this method, you may pay the due amount as and when you see fit. The full amount must be paid off before the due date.
Gold Loan Interest Rates – FAQs
Q. Can anyone avail the gold loan?
Ans. Gold loan can be availed by anyone who is over 18 years of age and should own gold ornaments or items. Applicants must meet the bank’s other internal eligibility criteria as well.
Q. How long does it take to process Gold Loan application?
Ans. Gold loan is usually disbursed on the same day. However, the bank may take some time to appraise your gold articles, this may cause some delay. Once your gold articles have been appraised and verified, you can expect quick disbursal.
Q. How can I repay the gold loan amount?
Ans. You can repay the loan amount via cash, cheque, Demand Draft (DD) or through fund transfer. You may also use the bank’s mobile app to pay off the amount.
Q. Is it possible to repay my gold loan amount partially?
Ans. Yes, some gold loan schemes allow you to make a partial payment. However, your gold ornaments will be released only when the entire outstanding amount has been repaid.
Q. Can I prepay or foreclose my gold loan?
Ans. Yes, you may foreclosure the loan account. However, you might be charged foreclosure charges.
Q. How much loan amount can I expect for my gold articles?
Ans. The loan amount is dependent on various factors which include gold rate, quantity & purity of gold in the ornaments and relationship with the bank.