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Home » Got into a Cash Crunch? Well, It’s Time To Get a Gold Loan at an Attractive Interest Rate

Got into a Cash Crunch? Well, It’s Time To Get a Gold Loan at an Attractive Interest Rate

Gold Loan

It’s been a very old yet great saying that “Gold” is the best asset humans can hold. The high return value of gold makes it a very useful asset that can be used in a cash crunch situation. A gold loan is available to address urgent financial needs by pledging gold, gold jewelry, or coins as security with the bank or lender. The gold assets kept as collateral are safely returned once the loan is fully repaid, and the bank assesses interest on the amount borrowed.

Despite being a secured loan, the interest rate on a gold loan starts at just 7.00% annually, which is the lowest in India. Moreover, in order to fulfill your urgent cash demand, you can always count on gold loans as it is very easy to get one. This article will give you more information about gold loans and how you can get one. So, stay tuned with us till the end to uncover every detail of it.

Things to know before applying for a Gold Loan

If this is your first time applying for a gold loan, you should be aware of the following:

Maximum Loan Amount: Banks only lend up to a certain proportion of the value of the gold. Currently, you are eligible for a loan sum equal to up to 90% of the gold value of your gold jewelry. The bank, however, has the final say in the loan amount offered to applicants. Therefore, if the bank values your gold items at Rs. 10,000, you may be eligible for a loan sum of up to Rs. 9,000.

Safety of Your Gold Item: The bank becomes in charge of keeping the gold asset safe, which you dispose of. Some lenders may insure even your gold articles. If you’d like, you can learn more about the security precautions the bank has in place to protect your gold items.

Loan Payment Default: If you don’t make your loan payments on time, the bank has the power to sell your gold items at auction. As a result, you must pay back the loan amount on time.

Why you should go for a gold loan?

The pointers listed below will convince you why you should take a gold loan:

  • The loan approval takes only 10 minutes.

  • Since collateral is offered, loans are available at cheap affordable rates.

  • There will be no further security or collateral required than gold jewelry.

  • In contrast to a home or auto loan, the money can be utilized for a variety of things.

  • You only need to submit very minimal documents for loan approval.

  • You don’t need a good credit score to apply for a gold loan.

  • You can pay only the interest part initially and pay the principal amount when the loan matures.

What are the factors that can affect the gold loan interest rates?

The below factors are responsible for affecting the gold loan interest rates:

Loan Amount: The loan amount directly impacts the interest rate that the bank will charge you. So, if you need a big loan, be prepared to pay higher interest rates.

Purity and Weight: The maximum gold loan amount that will be granted to you depends on the weight and purity of the gold items. A bank-designated officer examines the quantity and quality of the gold objects. Notably, most banks won’t accept gold jewelry with a purity of less than 18 k.

Income: The majority of banks do not require applicants to show proof of their income. Banks, on the other hand, prefer to lend money to clients who have a reliable source of income.

Lending rate of banks: The interest rate offered to applicants is influenced by the lending rate of banks, often known as MCLR (Marginal Cost of Fund Based Lending Rate) or RRLLR (Repo Rate Linked Lending Rate). Banks that issue gold loans against RRLLR transmit RBI Repo Rate cuts much faster to applicants.

Price of gold in the market: If the market price of gold is high, the value of the gold jewelry or coins that you are pledging will also be high. Lenders will offer you a lower interest rate in such cases since the risk associated is low. If for some reason, you cannot pay the equated monthly instalments (EMIs), the lender can easily recover the outstanding amount by selling/auctioning the gold ornaments.

Inflation: People tend to accumulate more gold when the rate of inflation is high because it lowers the value of money. When inflationary conditions last for a longer time, gold serves as a hedge against them. As a result, gold prices rise. If you want to get a gold loan at this time, lenders might offer you a cheaper interest rate.

Relationship with the bank or lending organization: The majority of lenders only provide gold loans to their existing clients, while occasionally, people without a banking background may also be eligible. However, existing clients of banks and lending institutions are frequently in a stronger position to bargain for a lower interest rate.

How to repay the gold loan?

There are various methods by which you can repay the gold loan. We have listed them below:

Bullet repayment: The bullet repayment method requires that you pay back the full balance, including principal and interest, all at once at the end of the term.

Pay interest as EMI & principal later: You have the choice to make monthly EMI payments to cover the interest here. The borrowed money must be fully paid back at the end of the term.

Regular EMI: For the term of the loan, the principal and interest due will be split equally and made due each month.

Partial Payments: With this option, you are free to make payments as you see feel convenient. However, the entire sum must be settled prior to the due date.


By now, you must have understood that buying a piece of gold jewelry or coin can be a very great asset that can bring you guaranteed returns when required. The best part is that you don’t need to have a good credit score to get a gold loan. Just go to the bank where you have your existing account, and they will approve the loan very easily.


The type and quality of the gold jewelry you promise will affect the interest rate for gold loans. The amount of the loan that the lender would approve will also depend on the quality of the gold. The gold jewelry must be between 18 and 24-carat weight to qualify for a gold loan. The bank’s jewelry appraiser will confirm this. The weight of the precious stones will not be included in the calculations if the gold jewelry has them in it.

No, when you apply for a gold loan, lenders won’t consider your credit score. You may apply for a gold loan if you are at least 18 years old and have documentation demonstrating your ownership of the gold.

Typically, gold loans are approved on the same day. However, it could take some time for the bank to evaluate your gold items, which could lead to a delay. You should anticipate a prompt disbursement when your gold items have been authenticated and valued.

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