What You Need To Know About Loan Against Gold

loan against gold

Based on the need for collateral, the loans offered by the lenders can broadly be divided into two streams, secured and unsecured loans. Gold loans fall in the secured category with the need to pledge collateral in lieu of the loan. A collateral is a piece of property or assest that the borrower owns and needs to pledge against the loan amount as security. In case the borrower fails to repay the loan within the tenure, the lender gets the right to use the collateral as forfeiture to get the sanctioned capital back. Gold loan is a special kind of secured loan in which the borrower has to pledge gold as collateral. The upper limit of the approved amount is entirely dependent on the value of gold pledged by the borrower.

Why go for a gold loan?

The gold loan market has been prospering at a fast rate since the past few years. The recent studies show a remarkable increase in the prices of stocks of some significant gold financing companies, depicting the promising rate at which they are growing. Based on the recent KPMG report, the gold market is about to hit the Rs.4,617 billion mark by 2022. It is definite proof of the customers’ contentment and trust in gold loans. Before we get into the fantastic attributes of gold loan that is enabling it to stand out in the competition, let us look at the eligibility criteria for availing a gold loan.

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Eligibility criteria for a gold loan

Gold loans put forward a very few essential eligibility criteria for the aspiring applicants making it easier and approachable to a large section of the population.

Age group

The individual must be a citizen of India and should be 18 or above and below 75 years old to apply for a loan against gold.

Purity of gold

The gold to be pledged against the gold loan amount needs to be 18 carats to 20 carats.

These are a few criteria that need to be met to apply for a loan against gold. Now let us move on to the key features of the gold loan that has made it so popular among the borrowers.

Features of a gold loan

Budget-friendly Interest rates

Gold loans come at affordable varying from lender to lender and depending upon the amount required. To find the most lucrative gold loan scheme, you need to compare multiple cash for gold schemes. You can find a gold loan interest calculator online that can help you figure out the overall interest that you have to pay for the sanctioned cash for gold loan amount for the tenure. All you need to do is to select the gold loan amount that you are willing to approve, the rate of interest charged for the particular gold loan scheme and the loan tenure.

Disbursement period

Gold loans are a type of secured loans and hence require very little documentation. It saves a lot of time in the verification process, making it the best option to avail at the time of financial emergencies.

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It usually takes a few hours to a day for the disbursement of the loan amount depending on the lender.

No comparison of credit score

A credit score or CIBIL score is a three-digit score ranging from 300-900 offered to an individual based on his or her credit history. Unlike personal loans or business loans in which the lenders prefer individuals with a higher CIBIL score, gold loans being secured loans, the lenders do not consider the individual’s credit score. Hence, applicants of instant cash for gold can get the loan approval irrespective of their credit score.


Gold loans do not need much documentation or formalities because they are secured loans. The applicant is only required to submit a few necessary identity proofs. It makes availing a loan against gold, a lot less cumbersome as compared to others.

Flexible repayment options

Loan against gold allows you to repay the loan in two ways. You can choose to pay the entire amount at the end of the loan tenure or opt for structured equated monthly instalment option. In case you want to go for the EMI option, gold loan EMI calculator can be found online which can tell you the exact equated monthly instalment that you need to pay every month, helping you to access your finances in advance. All you need to do is to set the sanctioned loan amount, rate of interest of the particular instant gold loan scheme and the tenure.

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