How do fluctuations in gold prices impact your gold loan?

Learn how changes in the price of gold can affect your gold loan interest rate, loan amount, repayment terms, and more.
How do fluctuations in gold prices impact your gold loan?
2 min read
20 Apr 2023

With gold prices rising, Indian consumers are understanding the true value of the jewellery lying idle at home. Gold is regarded as a safe and reliable asset that can be easily liquidated in times of financial emergencies. This makes gold loans a great way to obtain instant funds to cover all your urgent needs.

Gold loans are a type of secured loans – you can pledge your gold jewellery and borrow money against it. When you repay the loan, you can take your gold back.

Gold loan interest rates are typically lower than those for other loans, and the actual value of the loan depends on the current gold rate. These loans come with a very basic eligibility criteria. Almost anyone with gold jewellery of 18-22 karat purity can apply for the loan.

And that is not all. You need just your gold loan documents like any one of your KYC documents – Aadhaar Card, voter ID card, passport, or driving licence to get a Bajaj Finserv Gold Loan.

With quick processing and large loan amounts (we offer loans of Rs. 5,000 to Rs. 2 crore), gold loans have risen in popularity over the last few years.Now that you know how easy it is to get a gold loan, let's discuss how the market rate of gold impacts gold loans.

Impact of gold price fluctuations

The demand for gold loans is closely tied to the market price of gold. When you apply for a gold loan, the amount you can borrow depends on factors such as the weight and purity of the gold ornament, as well as the current market rate of gold.
The changes in the market price of gold are an important factor in determining the baseline value of the gold loan. The loan-to-value (LTV) ratio, which represents the percentage of your gold's value that can be borrowed, is also affected by changes in the gold rate. As per RBI regulations, most lenders offer a maximum LTV of up to 75% for gold loans.
For instance, if you pledge gold with a current value of Rs. 1 lakh, the highest loan amount you can receive is Rs. 75,000. However, if we suppose that the price of gold increases by 5%, the value of the gold that was worth Rs. 1 lakh will now be worth Rs. 1.05 lakh. In this scenario, the LTV ratio of 75% would equal Rs. 78,750. In other words, borrowers can obtain a larger loan amount if the value of their gold increases.

Bajaj Finance provides gold loans at the most competitive interest rates, with easy eligibility requirements and minimal paperwork. The loan amount can be disbursed within a few just a few hours.

How to apply for a Bajaj Finserv Gold Loan

You can follow these simple steps to apply for a Bajaj Finserv Gold Loan:

Step 1: Click on the ‘APPLY’ button to open the online application form.

Step 2: Enter your name and mobile number.

Step 3: Type the name of your city and select the branch closest to you.

Step 4: Submit the OTP sent to your phone and complete the online process.

A Bajaj Finance representative will assist you with an appointment at your preferred gold loan branch.

You are invited to visit us with your 18-22 karat gold jewellery at the time convenient to you. Our staff will evaluate the purity of your gold jewellery and process your application.

We will keep your gold jewellery safely in a state-of-the-art vault. Your gold will be kept securely and returned to you when you complete your repayment tenure. We also offer free insurance for the gold while it is in our custody.

It is really that simple. Get a gold loan of up to Rs. 2 crore to meet any of your planned or unplanned financial needs.

With lightning quick processing at more than 800 branches across the country, we will do our best to get you the funds you need in an easy and hassle-free way.


While care is taken to update the information, products, and services included in or available on our website and related platforms/ websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/ service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/ service document and applicable terms and conditions. In case any inconsistencies are observed, please click on reach us.

*Terms and conditions apply