Last Updated:June 24, 2025, 16:21 IST
Gold has long been one of the most preferred investment choices in India.
Here’s all about what exactly a gold loan is, and how it functions.
Gold has always been a popular investment in India, but it’s not just for saving; it can also help during financial emergencies. If you are facing money troubles, one useful option is a Gold Loan, where you borrow money by pledging your gold ornaments as security. It’s a quick and easy way to get funds when you need them most.
But what exactly is a gold loan and how does it work? Let’s break it down simply.
What Is a Gold Loan?
A gold loan is a type of secured loan where you borrow money by giving your gold jewellery, coins, or bars to a bank or financial company as security. The loan amount you get depends on the current market value of the gold. Once you repay the loan and interest in full, your gold is returned to you.
How Does a Gold Loan Work?
Here’s a simple step-by-step look at how gold loans usually work:
- Take your gold to the lender: You visit a bank or NBFC with your gold jewellery or coins. They check the purity and weight—only gold between 18 to 24 carats is accepted.
- Gold is valued: The lender checks the current market price of gold to calculate how much your gold is worth.
- Loan amount is given: Based on the value, the lender gives you a loan, usually up to 75 per cent of your gold’s value. The money is often handed over the same day.
- Choose how to repay: You can repay the loan in different ways—through EMIs, pay interest monthly and the principal later, or use a one-time bullet payment.
- Get your gold back: Once the full loan amount and interest are paid, your gold is returned in the same condition.
What Makes Gold Loans a Popular Choice in India?
Gold loans are widely preferred in India for several reasons:
– Quick approval: The loan is usually processed and given within minutes.
– No income proof needed: Since gold is used as security, you don’t need to show salary slips or income documents.
– Flexible repayment period: You can choose loan terms ranging from 3 to 36 months.
– Lower interest rates: Compared to personal loans, gold loans often have lower interest.
– No impact on credit score: Your credit score stays safe unless you miss repayments.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
- Location :
Delhi, India, India
- First Published:
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