A loan against gold can provide access to funds without selling your gold. It is a secured borrowing option that may offer multiple repayment choices, minimum documentation and potentially lower interest rates than some unsecured loans. You continue to own the pledged gold, which is returned after you repay the loan and applicable charges.
Features
Calculator
FAQs
Videos
Rs. 5,000 - Rs. 2 crore
Calculate Loan Interest
To find the nearest gold loan branch,
click here
Enter phone and OTP | Check amount you can get | Apply for quick funds
In summary
- Understand that a gold collateral loan is a secured loan where eligible gold jewellery, ornaments or accepted gold coins are pledged as collateral.
- Check your eligibility based on the gold’s purity, net weight, applicable valuation and LTV.
- Know that Bajaj Finance offers gold loan from Rs. 5,000 up to Rs. 2 crore, subject to applicable eligibility criteria and terms.
- Prepare the required KYC document and eligible gold before applying.
- Repay the loan as agreed to have your pledged gold returned after clearing the outstanding dues.
Show More
Show Less
What is a gold collateral loan?
A gold collateral loan is a secured loan in which you pledge eligible gold jewellery, coins, or ornaments as security to borrow funds without selling your gold. The lender assesses the gold’s purity and net weight to determine its value and the eligible loan amount. Once you repay the loan and applicable charges, the pledged gold is returned to you. Gold Loans can be used to meet personal, medical, education, business or other financial needs.
What are the benefits of a gold collateral loan?
Gold collateral loans are an excellent financing option for those seeking quick and convenient access to funds. These loans are secured against gold jewellery, which speeds up the approval process and minimises documentation.
Key benefits of gold collateral loans:
- Quick approval and disbursal: Since gold has a clearly defined value, the need for credit history checks is reduced, leading to faster processing.
- Lower interest rates: Compared to unsecured loans, gold collateral loans usually offer competitive interest rates, making them more affordable.
- Accessible to wider audience: Any Indian citizen who is salaried, self-employed or a pensioner can apply, subject to meeting the applicable eligibility criteria, including the age requirement of 21 to 70 years. The pledged gold serves as security for the loan.
- Convenient usage: The loan amount can be used for multiple purposes such as medical emergencies, education, or other personal needs.
- Multiple repayment options: Borrowers can choose from multiple repayment plans suited to their financial convenience.
This makes gold collateral loans both secure and borrower-friendly.
How does a gold collateral loan work?
A collateral loan against gold is a simple way to borrow money by pledging eligible gold asset as security. The lender evaluates your gold based on its purity and weight and determines the loan amount using the lower of the previous day's closing price or the 30-day average closing price published by IBJA or a SEBI-regulated commodity exchange, along with the applicable Loan-to-Value (LTV) ratio. Once approved, your gold is stored securely until the loan is repaid.
Here is how the process works:
- Pledge your gold: Visit the lender with eligible gold jewellery and the required KYC documents.
- Gold evaluation: The lender checks the purity, weight, and value of your gold to determine your eligible loan amount.
- Accept the loan offer: Review the sanctioned loan amount, interest rate, repayment option, and tenure before proceeding.
- Receive the funds: After approval, the loan amount is disbursed, often on the same day*.
- Repay the loan: Pay the interest and principal as per the selected repayment schedule.
- Get your gold back: Once all outstanding dues are cleared, your pledged gold is safely returned.
Wondering how much you can borrow on your gold? Just check your gold loan eligibility—it takes seconds and requires minimal paperwork.
Features of collateral loans
Collateral loans are a secure and efficient way to meet various financial needs without selling off valuable assets. These loans require pledging an asset like gold, property, or fixed deposits, offering several borrower-friendly features.
Key features of collateral loans:
- Lower interest rates: Since the loan is backed by physical gold, lenders offer competitive interest rates, reducing the cost of borrowing.
- Loan amount and tenure: The sanctioned amount depends on the gold’s value, with repayment options suited for short or long durations. Avail loans from Rs. 5,000 up to Rs. 2 crore.
- Quick approval and disbursal: Lenders process collateral loans faster due to the reduced risk, minimal paperwork and quick processing often disbursing funds within the same day.
- Asset ownership retained: Borrowers continue to own the pledged gold during the loan tenure. The asset is returned after full repayment.
- No foreclosure charges: The loan can be foreclosed or part-prepaid before the loan tenure without incurring any additional charges.
Collateral loans thus offer a cost-effective and secure way to handle financial commitments.
Assets eligible for collateral loan
When applying for a collateral loan, lenders require you to pledge an asset with monetary value as security. The type of asset accepted depends on the lender's policy and the loan product. Along with an eligible asset, borrowers must also meet the lender's basic eligibility criteria and complete the required KYC verification.
Common assets accepted as collateral include:
- Gold jewellery: One of the most popular options in India for accessing quick funds. Bajaj Finance accepts 18-22 karat gold jewellery and ornaments, and gold coins up to 24 karat purity, subject to its lending policy.
- Real estate: Residential or commercial properties are commonly accepted due to their long-term value.
- Fixed deposits: Deposits held with the same bank or financial institution can be pledged while continuing to earn interest.
- Vehicles: Cars and certain other vehicles may be accepted as collateral for eligible loan products.
- Financial investments: Some lenders also accept shares, bonds, or mutual funds, although eligibility depends on their policies and market value.
To apply for a gold collateral loan, you must generally be an Indian citizen aged 21 to 80 years and provide any one valid KYC document, such as an Aadhaar card, Voter ID card, Passport, Driving Licence, NREGA Job Card, or a Letter issued by the National Population Register. For loans of Rs. 5 lakh or above, PAN may also be required. Always ensure your pledged asset meets the lender's eligibility criteria and has sufficient value to secure the required loan amount. Bajaj Finance offers gold loans of up to Rs. 2 crore against eligible gold assets.
How to use gold as collateral: step-by-step guide
Using gold as collateral means pledging eligible gold jewellery or ornaments with a lender to secure a loan. The loan amount is generally based on the gold’s purity, net weight, applicable gold rate and LTV. Follow these steps to understand how the process works:
- Evaluate your gold: Gather your gold jewellery, coins, or bars and assess their purity and weight, as these factors determine the loan amount.
- Application: Visit the chosen lender with your gold and necessary documents, including identification and address proof. Fill out the loan application form.
- Gold appraisal: The lender will appraise the gold to ascertain its market value. This involves checking the purity and weight of the gold.
- Loan offer: Based on the appraisal, the lender will make a loan offer, usually a percentage of the gold's value. Review and agree to the terms.
- Receive funds: Upon agreement, hand over the gold to the lender for secure storage. You will then receive the loan amount in your bank account.
- Repayment: Make regular interest payments during the loan tenure. Repay the principal amount as per the agreed schedule.
- Gold retrieval: Once the loan and interest are fully repaid, the lender will return your gold.
Types of gold accepted as collateral
When applying for a gold collateral loan, it's essential to know the types of gold that lenders typically accept as collateral. Generally, lenders prefer high-purity gold, as it holds more value and offers better security for the loan. With Bajaj Finance, you can get a gold loan of Rs. 2 crore against 18-22 carat gold.
Bajaj Finance accepts eligible 18-22 karat gold jewellery and ornaments as collateral for a Gold Loan. Gold coins up to 24 karat purity are also accepted, subject to the applicable terms and conditions.
- Ornaments: The total weight pledged across all Gold Loans for a single borrower cannot exceed 1 kg.
- Jewellery: The eligible amount is subject to the applicable maximum Gold Loan limit.
- Gold coins: The aggregate weight of gold coins pledged across all Gold Loans for a borrower cannot exceed 50 grams.
- Overall loan exposure: The combined loan exposure against jewellery, ornaments and gold coins cannot exceed Rs. 2 crore, subject to applicable eligibility criteria.
The final loan amount depends on factors such as gold purity, net weight, applicable gold rate, valuation and LTV limits.
Understanding repayment terms for gold collateral loans
Repayment terms for gold collateral loans are designed to be convenient and accommodating, ensuring borrowers can manage their loan obligations effectively. Typically, they include monthly, bi-monthly, quarterly, half-yearly or annual interest payments, allowing borrowers to choose a schedule that best suits their financial situation. The loan tenure can range from a month to a year, depending on the borrower's requirements. Interest rates for gold loans are generally lower than those for unsecured loans, providing a cost-effective borrowing solution.
Bajaj Finance offers the option of paying only the interest during the loan tenure, with the principal amount due at the end of the term. Additionally, prepayment of the loan is usually allowed without any penalties, offering further flexibility.
Understanding these repayment terms helps borrowers plan their finances effectively and ensures timely repayment, which is crucial for retrieving the pledged gold.
Show More
Show Less
Gold loan interest rates and charges
The gold loan interest rate represents the cost of borrowing against your gold jewellery. With Bajaj Finance, gold loan interest rate starts at just 9.50% to 24.25% per annum. You can rest assured of zero hidden charges with our 100% transparent terms and conditions.
Show More
Show Less
Calculate your gold loan
Not your nearest branch?
How to apply for a gold loan
Applying for a Bajaj Finance Gold Loan is quick and convenient. Just visit your nearest branch with your gold jewellery and valid KYC documents. The team will check the purity and weight of your gold, calculate your eligible loan amount, and process it on the spot. In most cases, the loan amount is disbursed to your account the same day, so you can access funds exactly when you need them. For even more convenience, you can also apply online through the Bajaj Finance App or website, making the process seamless from start to finish.
It takes just 2 steps to check your eligibility for a Bajaj Finance Gold Loan. Enter your mobile number now.
Show More
Show Less
Frequently asked question
Gold Collateral
How is the value of the gold collateral determined?
The value of gold collateral is determined through a process of appraisal. A qualified appraiser assesses the gold's purity, usually measured in carats, and its weight. The appraiser then uses the current market price (as per IBJA) of gold to calculate its value. Typically, higher purity gold, such as 22-carat, holds more value. The lender will then offer a loan amount based on a percentage of this appraised value.
Can I get a loan using gold as collateral?
Yes, you can obtain a loan using gold as collateral. Bajaj Finance offers gold loan, where you pledge your gold jewellery, or coins, to secure the loan. The loan amount is determined based on the gold's market value (as per IBJA), and the approval process is usually quick and straightforward. This type of loan provides immediate access to funds at relatively low-interest rates, making it an attractive option for those needing urgent financial assistance.
Is gold a good collateral?
Yes, gold is an excellent collateral because it has a stable value, is easily verifiable, and widely accepted by lenders. It allows quick loan approval and offers borrowers access to funds even if they have a low credit score, making it a reliable security for loans.
Is gold a collateral security?
Yes, gold acts as collateral security when pledged against a loan. It serves as a guarantee for the lender, reducing their risk. If the borrower defaults, the lender can sell the gold to recover the loan amount, making gold a valuable and secure form of collateral.
What is a gold collateral loan and how does it work?
A gold collateral loan is a secured loan where you pledge eligible gold jewellery, coins or ornaments to a lender in exchange for funds. The lender evaluates the gold’s purity and weight, determines the eligible loan amount as per applicable LTV norms, securely stores the pledged gold, and returns it after you repay the loan along with the applicable interest.
Related Articles
Disclaimer
Bajaj Finance Limited (BFL) has the sole and absolute discretion, without assigning any reason to accept or reject any application as per BFL policy. *