What is Gold Loan?
A gold loan is one of the fastest ways to raise money in India without selling family jewellery. You take your ornaments to a lender, they test the purity and weigh the gold, and they offer a loan based on its value. The gold stays in the lender's safe custody and comes back after you repay the loan with interest.
Because gold is the security, approval depends less on your salary or credit score than for a personal loan, and money is often paid out the same day. That convenience has risks. If you cannot repay, the lender can auction your gold after notice. This page explains how loan-to-value works, how repayment options differ, what charges to expect and how to protect your jewellery.
Gold Loan at a glance
| Typical loan amount | Roughly ₹10,000 to ₹25 lakh or more, depending on the weight and purity of your gold |
|---|---|
| Tenure | Roughly 3 months to 3 years, with bullet repayment capped at 12 months |
| Indicative interest rate | Roughly 9% to 24% a year, depending on lender, loan size and scheme |
| Processing fee | Roughly 0% to 2% of the loan amount, plus applicable taxes |
| Security / collateral | Gold ornaments or eligible coins pledged with the lender; no other collateral is usually needed |
| Typical time to disbursal | Often within an hour or the same day after valuation |
| Loan type | Secured |
Indicative ranges based on general market practice in India. Your offer will differ. Last reviewed 3 October 2026.
Who should consider Gold Loan?
- Households facing a sudden expense such as medical bills, school fees or a repair, who want cash without selling gold
- Salaried or self-employed people with a thin credit record who find unsecured loans hard to get
- People who need short-term cash for a few months and expect a lump sum, such as a bonus or crop income
- Anyone who wants a lower rate than a personal loan and is comfortable pledging jewellery
Gold Loan eligibility criteria
| Criterion | What lenders typically look for |
|---|---|
| Age | Usually 18 to 70 years. Lenders may ask for a co-applicant for borrowers at the age extremes. |
| Gold ownership | You must own the gold. Lenders may ask how you came by large quantities, and a declaration of ownership is required. |
| Gold type and purity | Ornaments are accepted by most lenders, and some accept limited coins. Purity is usually 18 to 22 carat or higher, and the lender tests it on site. |
| Quantity limits | RBI rules set limits on how much gold ornaments and coins can be pledged by one borrower. Gold bars and biscuits are not accepted. |
| Identity and KYC | You need valid identity and address proof. KYC is mandatory for every borrower. |
| Repayment capacity | For larger or longer loans, lenders may assess your income or credit record, even though the gold is the security. |
Documents required for Gold Loan
- Aadhaar or another officially valid identity document
- PAN card, or Form 60 if you have no PAN
- Address proof such as a utility bill or passport
- Passport size photographs
- Proof of income for larger loans, such as bank statements or salary slips
- Declaration of ownership of the pledged gold
- Signed loan agreement and pledge receipt listing each ornament
How does Gold Loan work, step by step?
- Take the gold to the lender. Visit a branch with your ornaments and KYC papers. Remove stones and fittings if you can, as lenders deduct the weight of non-gold parts.
- Purity test and valuation. The lender tests purity and weighs the gold. Value is based on a benchmark price for 22-carat gold, and the loan is capped by the RBI loan-to-value limit.
- Choose repayment style. Common options are monthly interest with principal at the end, regular EMIs, or a single bullet payment. Bullet repayment is limited to 12 months.
- Sign and pledge. You sign the agreement and the lender gives a receipt listing your gold. Check each item, its weight and the stated purity before leaving.
- Receive the money. The loan amount is credited to your bank account or paid in cash up to the permitted limit. This often happens on the same day.
- Repay and take back your gold. After full repayment, collect your gold. RBI rules require return within a short period and compensation for delays beyond the stated limit.
Estimate your Gold Loan EMI
Example values only. Replace them with the figures in your own offer.
Reducing-balance method. Excludes processing fees, GST, insurance and other charges.
Gold Loan interest rate, fees and charges
Interest is the main cost, and it varies by loan size, scheme and lender. Smaller loans often carry higher rates. Look for processing fees, valuation or appraisal charges, insurance and penalty rates if you miss a payment. A low headline rate can hide higher charges, so use the Key Fact Statement to compare the annual cost and total repayment.
- Interest rate
- May be charged monthly on a reducing balance, or accumulate until closure in a bullet loan. Check how often interest compounds.
- Processing fee
- Some lenders charge up to about 2% of the loan, others waive it. It may be deducted before you receive the money.
- Valuation and storage charges
- A fee for testing, packaging and safe custody of the gold may apply.
- Penal interest
- A higher rate or charge applies if you delay interest or principal payments. Under RBI rules, penal charges must be disclosed and not compounded.
- Auction and recovery costs
- If the loan goes into default, the lender may recover its costs from auction proceeds after notice.
Indicative rates as of October 2026. Figures are market ranges, not offers, and are reviewed every 90 days (next review January 2027). Your rate is fixed by the lender in the sanction letter and Key Fact Statement.
Worked example: what this loan really costs
Illustration for about 35 grams of 22-carat jewellery pledged, using mid-range figures seen in the market as of October 2026. Your lender's Key Fact Statement will show your own numbers.
| Loan amount | ₹2,00,000 |
|---|---|
| Interest rate (reducing balance) | 11.0% a year |
| Tenure | 12 months |
| Monthly EMI | ₹17,676 |
| Total interest paid | ₹12,116 |
| Total repaid | ₹2,12,116 |
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), with r the monthly rate. Processing fees, GST and insurance are extra; the annual percentage rate in the Key Fact Statement includes them. Check the figures in our Gold Loans EMI calculator.
Pros and cons of Gold Loan
Advantages
- Fast approval, often on the same day
- Lower rates than most unsecured loans
- Little dependence on credit score or salary
- Flexible repayment options including interest-only payments
Limitations
- You can lose the pledged gold if you default
- Loan value is capped at 75% to 85% of gold value
- Gold price drops can reduce your borrowing power or trigger demands for top-up
- You are without the jewellery during the loan period
Mistakes to avoid with Gold Loan
- Focusing only on the interest rate
- Compare processing fee, valuation charges and how interest accumulates. A lower rate with high fees can cost more than a slightly higher rate with none.
- Not checking the pledge receipt
- Verify every item, weight and purity on the receipt. Disputes after repayment are easier to settle when the document matches your jewellery.
- Ignoring the bullet repayment deadline
- Bullet loans cannot run beyond 12 months. If you cannot pay the lump sum on time, the lender can treat it as overdue and may auction the gold.
- Choosing an unfamiliar lender
- Check that the lender is regulated, has secure vaults and insures the gold. Avoid anyone who offers unusually high amounts or asks you to sign blank papers.
Gold Loan compared with similar loans
- Gold Loan vs Personal Loan
- A personal loan needs no collateral but depends on your income and credit score and usually costs more. A gold loan is secured by your jewellery, so it is quicker and cheaper but puts your gold at risk if you default.
- Gold Loan vs Gold Loan Overdraft
- A standard gold loan pays out one lump sum with fixed repayment. A gold loan overdraft gives you a limit against your gold that you can draw and repay repeatedly, paying interest only on the amount used.
- Gold Loan vs Gold Loan Balance Transfer
- A regular gold loan is a fresh loan against your jewellery. A balance transfer moves an existing gold loan to another lender, usually for a lower rate or better terms, and involves closing the old loan and re-pledging.
Rules and regulations that apply to Gold Loan
RBI's gold and silver collateral directions cap the loan-to-value ratio at 85% for loans up to ₹2.5 lakh, 80% above that up to ₹5 lakh and 75% above ₹5 lakh. Bullet repayment loans cannot exceed 12 months. Lenders must return pledged gold promptly after repayment, or face compensation, and must disclose all charges in a Key Fact Statement.
Rules that protect you, with the source
- Key Fact Statement. For retail and MSME loans sanctioned from 1 October 2024, the lender must give you a KFS with the annual percentage rate and a repayment schedule before you sign, and cannot charge a fee that is not in it. RBI circular, 15 April 2024.
- Pre-payment charges. For floating-rate loans to individuals for non-business purposes sanctioned or renewed from 1 January 2026, no pre-payment or foreclosure charge can be levied. RBI Directions, 2 July 2025.
- Free credit report. Every credit bureau must give you one free full report with score each calendar year. RBI notification, 1 September 2016.
- Complaints. If the lender does not resolve a complaint within 30 days, you can go to the RBI Ombudsman free of charge. Integrated Ombudsman Scheme, 2021 · file at cms.rbi.org.in.
Gold Loan: frequently asked questions
How much loan can I get on 10 grams of gold?
It depends on purity, the day's benchmark price and the lender's policy. For example, if 10 grams of 22-carat gold is valued at ₹1 lakh, a lender can lend up to ₹85,000 under the 85% cap for small loans. Actual amounts vary, so ask for a valuation at the branch.
What is the maximum loan-to-value on a gold loan in India?
RBI sets the maximum at 85% for loans up to ₹2.5 lakh, 80% for loans above ₹2.5 lakh up to ₹5 lakh, and 75% for loans above ₹5 lakh. Lenders can choose to lend less. A lower ratio gives you a bigger cushion if gold prices fall.
Can I get a gold loan with a low CIBIL score?
Often yes, since the gold is the security. Many lenders place less weight on credit scores for gold loans, though larger loans may involve a credit check. Approval still depends on the lender's policy, and a poor record may mean a higher rate or smaller amount.
What is bullet repayment in a gold loan?
In bullet repayment, you pay the principal and accumulated interest in one payment at the end, instead of monthly instalments. Under RBI rules, such loans cannot run beyond 12 months. If you cannot pay the lump sum at maturity, the loan becomes overdue.
Is my gold safe with the lender?
It should be if the lender uses a secured vault and insures the gold. Ask about storage, insurance and what happens in a theft or fire. Get a pledge receipt listing each item, and check that you can inspect your gold at closure.
What happens if gold prices fall during my loan?
If the gold price falls, your loan-to-value ratio rises. The lender may ask you to pay part of the loan or add more gold. If you do not, the lender can proceed to recovery. A lower initial loan amount gives you a safer buffer.
How soon will I get my gold back after repaying?
RBI directions require lenders to return the gold promptly after full repayment, within a short, stated window, and to pay compensation for delays beyond it. Ask the lender for its return timeline before you sign, and keep proof of your final payment.
Gold Loan in your city
Local guidance, documents and an EMI calculator for 1461 cities across India.
Official sources and further reading
These guides are written from Reserve Bank of India rules and official scheme pages. Rules, rates and scheme terms change, so check the current position on these sites and in your lender's Key Fact Statement before you apply.
- RBI: Key Facts Statement (KFS) for loans and advances. The Reserve Bank of India notification that tells lenders to give every borrower a plain-language statement of the full cost of a loan.
- RBI Complaint Management System. Where to take a complaint against a bank, NBFC or other regulated lender if the lender does not resolve it.
- RBI (Pre-payment Charges on Loans) Directions, 2025. Bars pre-payment charges on floating-rate loans taken by individuals for non-business purposes, for loans sanctioned or renewed from 1 January 2026.
- Reserve Bank - Integrated Ombudsman Scheme, 2021. The single complaint scheme for customers of banks, NBFCs and other RBI-regulated lenders.
- RBI: Free Annual Credit Report to Individuals. Credit bureaus must give you one free full credit report with score every calendar year.
- RBI Financial Education. Consumer guidance from the Reserve Bank of India on borrowing, fraud and your rights as a customer.
Edited by Hemant Kumar. Rates on this site are indicative ranges, not offers.
This page is general information, not personalised financial advice and not an offer. Rates and terms shown are indicative and vary by lender and applicant. Verify with the lender and read the Key Fact Statement before you sign.