Gold Loan vs EMI Overdraft Facility

A gold loan can be availed with an option to repay it in EMIs, or by just repaying the amount you used as an overdraft.
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Gold Loan
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3 min
21 May 2025

Gold loan with EMI vs overdraft: Which one should you choose?

If you need immediate cash, there are several options available, and two popular ones are a gold loan with EMI option and a gold loan with overdraft facility. But which one is better? Let’s dive in and take a closer look.

When comparing gold loan vs EMI, it is important to understand your repayment capacity and financial goals. A gold loan with EMIs allows you to repay the loan in fixed monthly instalments, which is ideal for salaried individuals with steady income. On the other hand, the overdraft facility offers flexible repayment, letting you pay interest only on the amount used.

Gold Loan with an EMI option

A gold loan with an EMI option is a type of loan that you can take against your gold. In this option, you can repay the loan amount in easy EMIs (Equal Monthly Instalments). The gold loan tenure tenure can range from months to years depending on the lender. The interest rates are usually lower compared to other types of loans as the gold is used as collateral. This option is ideal if you prefer a clear gold loan repayment plan that helps you manage your budget effectively. Some of the benefits of a gold loan with an EMI option are:

  1. Low-Interest rates: Since gold is kept as collateral, lenders offer lower interest rates compared to unsecured loans. This makes it an affordable option for those who require immediate cash.
  2. Quick disbursal: Gold loans are the quickest way to get cash as the process is straightforward, and loan disbursal is done within hours once the gold is assessed.
  3. No credit checks: Since this type of loan is secured against your gold, lenders do not check your credit score. Hence, even those with a poor credit score can avail themselves of this facility.

Gold Loan with an overdraft facility

The gold loan overdraft facility is also a type of loan in which you can borrow against your gold. The difference is that you can use the loan amount according to your needs, like a credit card.

This is a flexible gold loan repayment option, where interest is charged only on the amount you actually use. It allows borrowers to manage funds more efficiently without paying interest on the entire sanctioned amount. This flexibility is especially useful for those with unpredictable cash flow. Some of the key benefits of a gold loan with an overdraft facility are:

  1. Flexibility: An overdraft facility allows you to use only the amount you require, which makes it a suitable option for those who expect to need multiple small loans over time.
  2. Interest charges: Compared to regular loans where interest is applied on the entire sanctioned amount, a gold loan with an overdraft facility charges interest only on the amount utilised. This results in lower overall interest payments. Such flexibility makes it a smart choice for many borrowers, especially when gold interest rates are competitive and cost-effectiveness is a priority.
  3. Quick disbursal: Similar to gold loans with the EMI option, overdraft facilities also allow quick disbursal of funds. Hence, it can come in handy for those in need of immediate cash.

Gold Loan Vs EMI option and overdraft facility

Both gold loan with EMI option and overdraft facility has their advantages and disadvantages. Depending on your needs, you can choose the one that is best suited for you. Here is a comparison:

  1. Interest rates: Gold loans with an EMI option usually have lower interest rates than overdraft facilities.
  2. Payment option: In a gold loan with an EMI option, you have to pay a fixed amount every month until the loan tenure is complete. But in an overdraft facility, you have the option to choose how much to pay every month.
  3. Flexibility: When it comes to flexibility, the overdraft facility wins as it gives you the freedom to use the loan amount according to your needs.
  4. Loan tenure: In both options, the loan tenure is flexible, and it depends on the lender.

Both gold loan with an EMI option and overdraft facility are good options for those who need immediate cash. The choice between the two depends on the individual's requirements and their ability to repay the loan amount. Gold loans are an excellent option for those with a low credit score or those who do not want to go through the lengthy process of applying for an unsecured loan. However, before borrowing any loan, it is essential to read the terms and conditions carefully. Be sure to select a credible lender and take your time before deciding which option to choose.

Key Differences Between Gold Loan Overdraft and EMI

Feature

Gold Loan Overdraft Facility

Gold Loan with EMI Option

Repayment Flexibility

Highly flexible; pay interest only on the amount used

Fixed EMIs paid monthly, including principal and interest

Interest Calculation

Interest charged only on the utilised amount

Interest charged on the full loan amount

Disbursement

Full limit sanctioned, partial withdrawal allowed

Full amount disbursed at once

Best For

Frequent short-term cash needs

Planned, structured repayments over a fixed tenure

Cost Effectiveness

Lower interest cost if used smartly

Predictable and budget-friendly

Ideal Borrower

Business owners or those with irregular income

Salaried individuals or those with fixed monthly budgets

 

With Bajaj Finserv Gold Loan, you can choose the repayment structure that best suits your financial needs.

Gold loan overdraft benefits

A gold loan overdraft facility offers a smart and flexible way to access funds against your gold jewellery. Here are some of the key benefits:

  • Flexible withdrawals: With a gold loan overdraft facility, borrowers can withdraw funds as per their requirement, making it ideal for emergencies or irregular expenses.

  • Interest on usage only: Interest is charged only on the amount utilised, not the total sanctioned limit, helping reduce overall borrowing costs.

  • Convenient repayments: You can repay and re-borrow within the limit, offering unmatched flexibility compared to traditional loans.

  • No prepayment charges: Most lenders, including Bajaj Finserv, do not levy penalties on early repayments, lowering your total interest burden.

Gold Loan EMI benefits

A gold loan with EMI repayment is ideal for those who prefer structured and predictable payments. Here are the main benefits of opting for EMI-based gold loan repayment:

  • Structured repayment: EMI plans help in managing monthly finances better, as the principal and interest are paid in fixed monthly instalments.

  • Budget-friendly: With pre-decided EMIs, borrowers can plan their expenses without surprises, making it suitable for salaried individuals.

  • Loan tracking: Easy to monitor loan repayment progress over time with a defined tenure and EMI schedule.

  • Credit score boost: Timely EMI payments positively impact your credit history, improving future loan eligibility.

  • Longer tenure options: Bajaj Finance offers flexible loan tenure options, making it easier to choose repayment terms that suit your capacity.

Note: It is important to note that Bajaj Finance does offer gold loan overdraft facility as of today. For latest updates, check the Bajaj Finserv Gold Loan page.

Disclaimer

1. Bajaj Finance Limited (“BFL”) is a Non-Banking Finance Company (NBFC) and Prepaid Payment Instrument Issuer offering financial services viz., loans, deposits, Bajaj Pay Wallet, Bajaj Pay UPI, bill payments and third-party wealth management products. The details mentioned in the respective product/ service document shall prevail in case of any inconsistency with respect to the information referring to BFL products and services on this page.

2. All other information, such as, the images, facts, statistics etc. (“information”) that are in addition to the details mentioned in the BFL’s product/ service document and which are being displayed on this page only depicts the summary of the information sourced from the public domain. The said information is neither owned by BFL nor it is to the exclusive knowledge of BFL. There may be inadvertent inaccuracies or typographical errors or delays in updating the said information. Hence, users are advised to independently exercise diligence by verifying complete information, including by consulting experts, if any. Users shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

Who decides the making charges on gold?

The making charges on gold are usually decided by the jeweller or the goldsmith who is making the jewellery. The charges may vary from one jeweller to another, and it is always a good idea to compare the prices before making a purchase.

Do we need to pay EMI for gold loan?

Yes, gold loan can be taken on an EMI basis. The terms and conditions may vary from one lender to another, and it is important to read the documents before availing the loan.

What is the difference between EMI and overdraft?

EMI or Equated Monthly Installment is a fixed monthly payment that includes both principal and interest components. It is usually taken for a specific period and cannot be changed. Overdraft, on the other hand, is a flexible credit facility that allows a borrower to withdraw money up to a certain limit. The interest is only charged on the amount withdrawn, and the borrower can repay the amount as and when they want.

What is the overdraft facility against gold?

Overdraft facility against gold is a credit facility that allows a borrower to withdraw money up to a certain limit against the value of their gold. The interest is charged only on the amount withdrawn, and the borrower can repay the amount as and when they want. The limit is usually determined based on the value of the gold and the creditworthiness of the borrower. This facility is ideal for those who need immediate cash without having to sell their gold.

What is a gold loan with EMI?

A gold loan with EMI is a repayment option where you borrow money against your gold and repay it in fixed monthly instalments. These EMIs include both the principal and interest. With Bajaj Finserv Gold Loan, you can choose a to pay the interest on monthly, bi-monthly, quarterly, half-yearly or annual basis and repay the loan comfortably over time.

Can a gold loan be paid in EMI?

Yes, a gold loan can be paid through EMIs. EMI-based gold loan repayment option, where you can repay the loan in equal monthly instalments. This helps in better financial planning and gives you clarity on the repayment schedule. Though Bajaj Finserv Gold Loan offers interest only repayments in selected frequency, with option to pay the principal amount or any pending interest to be paid by the end of the tenure.

Can I obtain an overdraft against gold?

Yes, you can benefit from gold loan overdraft facility. This means you can withdraw funds as needed from the sanctioned amount, and interest is charged only on the amount you use. It offers great flexibility and is suitable for varying financial needs. Though it is important to note that Bajaj Finance does not offer this facility as of now.

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