Gold Loan

You can avail a loan from a bank or an NBFC by pledging your gold. You can pledge your gold coins or gold jewelry and avail a gold loan from a bank. The gold has to be of purity 18-24 carats.
You can pledge only gold jewelry to avail a gold loan from an NBFC.
The amount of loan you avail
In India, tradition demands that gold be collected and accumulated in the family. This means you can easily avail a gold loan with this family gold. You get an LTV (Loan to Value) ratio of 75%. You get INR 75 for every INR 100 you pledge.


Why avail Gold Loan?

Low Interest

you can preserve your savings and still provide for the costly education of your children. You don’t have to break your fixed deposits.

No credit History

Banks offer education loans at lucrative interest rates. No collateral for education loans up to Rs. 7.5 lakh.

High Margin

you don’t have to repay the loan until you finish your studies. Repayment is after completion of the course, or getting a job.

Easy Repayment

you can claim a tax deduction on the interest portion of your educational loan. Tax deduction for a period of 8 years, after you start paying back the educational loan.


Key factors to consider for Gold Loan

Rural areas

  • If you reside in a rural area, you can easily avail a gold loan from an NBFC (Non Banking Financial Company).
  • The documentation is much faster if you avail a gold loan from a NBFC rather than a gold loan from a bank.
  • Remember: The NBFC charges you a higher rate of interest on the gold loan than a bank. The interest charged by the NBFC could be around 22-24%.
  • Another benefit you get from availing a gold loan from a NBFC is you have to only pay the interest amounts regularly on the gold loan.
  • You pay the Principal (Borrowed amount) back, at the end of the term (tenure of the gold loan) and reclaim your pledged gold jewelry.
  • There are no processing charges and pre payment penalty, if you avail a gold loan from an NBFC.

Gold Loan

  • Banks and NBFCs give you loans against loan. Borrowers can pledge gold coins or gold jewelry and avail a gold loan. The purity of gold has to be between 18-24 carats.
  • Gold loan is a product designed to provide liquidity against gold ornaments without having to sell them. Gold ornaments lying idle can be put to better use by availing loan against gold ornaments.
  • Gold loan will be sanctioned on submission of all the required documents and satisfactory assessment of gold ornaments. Typically, gold loans have tenure of one year. This can be further extended.

Eligibility for Gold Loan

  • The borrower should be in the age group of 18-65 years.
  • Maximum age of applicant at loan application should not be more than 65 years.
  • The purity of gold ornaments should be 18 carats and above.
  • The gold jewelry should be owned by the borrower or any of the family members.

Advantages of Gold Loan

  • No income proof is required to apply for a Gold Loan.
  • Banks don’t check credit history to grant Gold Loan.
  • Gold Loan has less documentation.
  • Gold Loan interest rates are low as compared to personal loans.
  • Agricultural loan against gold is available for an agriculturist at a nominal rate of interest of 7-8% per year.
  • In case of NBFC, borrower will have an option to pay only interest during the tenor of the loan. At the end of the tenure, the borrowed amount is to be repaid in a single shot.
  • Gold loan takes less processing time.
  • Gold Loan has nominal processing fee or no fee at all.