Loan Against Gold

Loans against gold, commonly known as gold loans, provide a secure and accessible avenue for obtaining financial assistance. In this unique lending arrangement, individuals pledge their gold assets as collateral to secure a loan.

This form of financing offers quick approval, leveraging the inherent value of gold, and is often characterised by lower interest rates compared to unsecured loans.

Gold loans are a practical solution for those seeking immediate funds while utilising their gold holdings as a safeguard, presenting a reliable and widely accepted method of obtaining liquidity for various financial needs.

Why Take a Loan Against Gold

In times of financial need, unlocking the potential of valuable assets can be a strategic move. For many, gold jewellery holds not just sentimental worth, but also inherent financial value. This is where loans against gold (LAG) come into play, offering a flexible and accessible lending option

Here is why you should take a loan against gold:

  • 1. Quick and easy access to funds: Compared to other loan options, gold loans have minimal paperwork and fast disbursal, making them ideal for urgent needs or unexpected expenses.
  • 2. Lower interest rates: Securely backed by your gold, gold loans typically offer lower interest rates unlike unsecured loans like personal loans.
  • 3. No income proof required: Unlike many loans, gold loans don't require income proof, making them accessible even to individuals without formal employment.
  • 4. Flexible repayment options: Some gold loan providers offer flexible repayment options, allowing you to choose instalments or pay a portion of the interest while extending the loan tenure.
  • 5. Safeguarding your gold: Lenders store your gold in secure vaults, providing peace of mind for valuable assets.

Interest Rates for Loan Against Gold

The interest rates for loans against gold in India can vary depending on several factors. It could be that the lenders may offer varying rates of interest, based on the policies offered by the banks. The interest rates could also differ based on the loan amount and loan tenure, and as well as the purity of the gold, finally it could also be influenced by the Loan-to-value ratio (LTV) wherein the percentage of loan amount relative to the gold's value. Higher LTVs might come with slightly higher rates.

Here is the general interest rates for loan against gold:

Generally, interest rates for gold loans 8.00% p.a. to 26.00% p.a.
Note: These rates are indicative and subject to change. Always check with the bank for the most up-to-date information before making any investment decisions.

Loan Against Gold Details

Loan against gold is a great option to avail loans with the gold jewellery that you own. It is an attractive borrowing option for people who wish to get secured loans at low interest rates.

To know more about the interest rates or other details about gold loan, the table below will help you out.

Loan against gold Interest Rate 8.00% p.a. to 26.00% p.a.
LTV Up to 75% of gold value(based on several factors)
Loan Tenure 12 to 42 months
Foreclosure charges 1 % - 3%
Note- These rates are indicative and subject to change. Always check with the bank for the most up-to-date information before making any investment decisions.

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Top Banks Providing Loan Against Gold

When financial needs arise, securing a loan against gold is a reliable option offered by leading banks. These loans often come with competitive interest rates, flexible repayment terms, and swift approval processes. By pledging gold assets as collateral, individuals can access funds for various purposes, ensuring a seamless and trustworthy borrowing experience.

Here is a list of top banks and NBFCs that offer loans against gold.

Banks/ NBFCs Interest Rate (p.a) Amount Tenure
Manappuram Gold Loan 14% (Onwards) ₹1000 (Onwards) 6 to 12 months
SBI Gold Loan 8.75% (Onwards) ₹20,000 to ₹50 lakh Up to 36 months
HDFC Gold Loan 8.50% to 17.30% ₹10,000 (Onwards) Up to 42 months
Muthoot Gold Loan Starting at 12% Up to ₹5 crore 12 months (Onwards)
Axis Gold Loan 17% (Onwards) ₹25,001 to ₹25 lakh Up to 36 months

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Note: These rates are indicative and subject to change. Always check with the bank for the most up-to-date information before making any investment decisions.

Eligibility Criteria For Loan Against Gold

Securing a loan against gold is a straightforward process, yet certain eligibility criteria play a key role. Understanding these criteria is essential for a smooth and successful application, ensuring individuals can leverage their gold assets effectively for their financial needs:

  • Age: Must be at least 18 years old (some lenders require 21 years).
  • Nationality: Indian citizens or individuals with valid Indian residency proof.
  • Type of Gold: Most lenders accept 18K to 22K gold jewellery. Some may accept coins or bars based on specific policies.
  • Minimum Purity of Gold: Typically 18K.
  • Form of gold: Some lenders have restrictions on the form of gold accepted (jewellery vs. coins/bars).

Documents Required For Availing Loan Against Gold

Securing a loan against gold involves a straightforward process, starting with the required documentation. These documents can be different based on the lenders and can change accordingly.

Here are some of the common documents required:

  • Proof of Identity: PAN card, Aadhaar card, Voter ID card, Passport
  • Proof of Address: PAN card, Aadhaar card, Voter ID card, Utility Bills, Rental Agreement
  • Bank Statements: Recent bank statements with address details.
  • Proof of Gold Ownership: Jewellery bills or purchase receipts, Gold purity certificates.
  • Signature Verification Documents: Some lenders may ask for additional documents such as cancelled cheques or bank passbooks.

Features and Benefits of Loan Against Gold

Loans against gold offer several attractive features and benefits, making them a valuable financial tool for many individuals. Here are some key points to consider:

Low Risk

Backed by the value of gold,
you may get lower interest


Minimal documentation,
and ease of loan access

Asset Retention

Retain ownership of their
gold assets throughout the
loan tenure.

Quick Liquidity

Gold loans provide
immediate liquidity,
for urgent financial needs.

Competitive Interest Rates

Enjoy interest rates that are
dynamic and cost-effective

High Loan-to-Value (LTV)

Get a substantial loan amount
based on the appraised
value of the pledged gold.

How To Apply For Loan Against Gold

Step 1. Choose a Lender: Compare interest rates, LTV ratios, processing fees, and repayment options offered by different banks and financial institutions. Use an online comparison tool or consult financial advisors for guidance.

Step 2. Check your Eligibility: Ensure you meet the age, nationality, and document requirements as per your chosen lender.

Step 3. Prepare your Documents: Gather all necessary documents for identity proof, address proof, and proof of gold ownership (if available).

Step 4. Apply for the Loan: You can apply online on the lender's website or visit a branch in person. Fill out the application form accurately and provide all required details.

Step 5. Gold Valuation: The lender will assess the purity and weight of your gold jewellery.

Step 6. Loan Agreement and Disbursement: Upon approval, you will receive a loan agreement outlining the terms and conditions. Review the agreement carefully before signing.

Once signed, the loan amount will be disbursed to your bank account or in cash, depending on the lender's policy.

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Frequently Asked Questions

Loan against gold (LAG) is a secured loan you get by temporarily pledging your gold for cash, typically with lower rates than unsecured loans.

Most Indian citizens over 18 with valid identity proofs and gold above 18K purity can tap a loan against gold.

You can typically get up to 75% of the current market value of your gold ornaments, depending on purity, weight, and lender policies.

Most lenders in India accept 18K to 22K gold jewellery as collateral for LAG, with some also taking gold coins and bars based on specific policies.

No, you cannot wear or use your gold jewellery while it's pledged as collateral for a loan against gold (LAG). The jewellery will be securely stored by the lender until the loan is fully repaid and released. This ensures its safekeeping and protects the lender's investment.

Interest rates for LAG in India range from around 8% to 26% p.a., depending on the lender, loan amount, tenure, and gold purity.

The typical tenure for LAG in India ranges from 6 months to 36 months, although some lenders offer shorter or longer options depending on their policies and your specific loan terms.

LTV for LAG is determined by dividing the loan amount by the current market value of your gold, multiplied by 100 - typically capped at 75% in India

With LAG, you keep your gold but access cash at lower rates; selling gives immediate cash but at potential loss of value and sentimental attachment.

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