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Gold Loan Interest Rates Research Team | Posted On Wednesday, February 13,2019, 05:54 PM

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Gold Loan Interest Rates



What is Gold Loan?

 Gold loan or loan against gold, is a secured loan in which you pledge gold ornaments as security with a bank or NBFC. The lender in turn offers a loan amount in exchange for the gold. Gold loan is a quick and easy way of meeting immediate financial needs as compared to any other loan.

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Gold Loan Interest Rates​

What are the procedures?

There is no online procedure to avail gold loan. The individuals wanting to avail gold loans must visit the lender’s branch. The procedure to avail gold loan is as follows:

  • Walk in to the lender’s branch with gold, PAN and a valid address proof.
  • Lender would check the purity of gold. Higher the purity, higher would be the loan amount sanctioned.
  • The lender would check the current market price of gold before sanctioning the loan.
  • Banks and NBFCs sanction a maximum loan to value ratio of 75% as per RBI guidelines. This is LTV of 75%.
  • Lender sanctions loan after deducting processing fee and other applicable charges from the loan amount.
  • Lender would prepare the term sheet; you must read the term sheet thoroughly and clarify with the lender if you have any doubts before signing.
  • After signing term sheet, your loan would be disbursed. Hand over your gold to the lender, who will keep it in a locker.
  • Lenders disburse loan sanctioned in cash, if the loan amount sanctioned is less than Rs 2 Lakhs. If the loan sanctioned is in excess of Rs 2 Lakhs, then the lender would transfer the amount to your bank account by NEFT / RTGS.

SEE ALSO: Fixed deposit interest rate

Features and benefits of gold loan

Below mentioned are the major features and benefits of gold loan:

  • Quick processing: Gold loans are processed quickly. This is because physical gold is pledged. Lenders feel it’s safe to lend against physical gold as they have security which can be auctioned to recover unpaid dues.
  • Option to pay only interest: Gold loans come with a benefit of borrowers having to pay just the interest.  Principal can be repaid at the time of closing the gold loan.
  • Lower interest rate: Gold loans are offered at lower interest rates. This is because gold loan is a secured loan. Personal loans are expensive as lenders charge around 13 - 17% interest a year. Pledging gold would fetch loans at a very low interest rate.
  • No processing charges: There are many banks and NBFCs who don’t charge processing fees as these loans are given instantly in lieu of gold which is held as security against the loan by the lender.
  • Low or no foreclosure penalties: There are a few lenders who don’t charge any prepayment penalties. There are lenders who charge a prepayment penalty as low as 1%.
  • Income proof is not required: There is no need to provide income proof or bank account statement as physical gold is pledged with the lender.
  • Credit score is not checked: Unlike other loans, credit score is not checked by lenders while sanctioning gold loans. Gold is the security for lenders.
  • Safety of gold: The responsibility of the safety of gold lies with the lenders. The lenders keep it safe in their lockers which are heavily guarded. Borrowers don’t have to worry about their gold. It’s on the lenders to hand over gold once you make the repayment.  

SEE ALSO: WhatIs Input Tax Credit Under GST?

Gold Loan Interest Rates in India:

The table below shows the interest rate offered by the popular gold loan lenders:

Gold Loan Lender

Gold Loan Interest Rate

Golden Loan Processing Fee

Maximum Tenure

SBI Gold Loan


0.50% of the loan amount subject to a minimum of Rs. 500

36 months

Muthoot Gold Loan


0.25% to 1% of loan amount.

36 months

Manappuram Gold Loan


Rs. 10 (to be paid at time of settlement)

12 months




24 months




11 months

Yes Bank


Nil to upto 0.10%

36 months



1% of the loan amount

12 months

Federal Bank



12 months

Canara Bank


1% of the loan amount, min Rs. 1,000 and max Rs. 5,000 per loan

12 months

Andhra Bank


Nil processing fees

12 months

Axis Bank


0.25% - 1% of loan amount

24 months

IndusInd Bank


Up to 1% of loan amount subject to a minimum of Rs. 750.

12 months



upfront fees of 0.70% of loan amount + taxes

12 months

Gold Loan Eligibility

Below mentioned are the eligibility criteria for availing gold loan:

  • The applicant must be an Indian citizen.
  • The applicant must be at least 21 year old and less than 65 years.
  • The Gold loan must be repaid before you turn 65 years or before retirement, whichever is earlier.
  • You must have gold equivalent to the required loan amount.

All eligible gold loan seekers must carry the below mentioned documents to the lender’s branch to avail gold loan:

  • Latest passport size photograph
  • Valid photo identity proof
  • Valid address proof
  • Bank account details if the loan amount required is in excess of Rs 2 Lakhs. 

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