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Types of gold loan: understand your options
A gold loan lets you access funds by pledging eligible gold jewellery, ornaments or coins as collateral. Your loan amount depends on factors such as gold purity, net weight, assessed value and the applicable LTV limit.
Bajaj Finance offers gold loans from Rs. 5,000 up to Rs. 2 crore. You can use the funds for eligible personal or financial needs without selling your gold. Your gold is assessed in your presence, and only its intrinsic gold value is considered. Stones, gems and embellishments are excluded from the valuation.
Quick tip: Check eligibility for a gold loan and get the maximum value for your gold jewellery, ornaments or coins.
Types of gold loans available in India
Gold loans can differ based on the type of gold you pledge and the way the loan is structured. The main types include:
- Gold loan against jewellery or ornaments
- Gold loan against gold coins
- Term gold loan
- Gold overdraft facility
However, not every lender offers every type. Bajaj Finance offers term gold loans against eligible gold jewellery, ornaments and coins. It does not offer a gold overdraft facility.
Gold loan against jewellery and ornaments
A gold loan against jewellery or ornaments allows you to pledge eligible gold jewellery or ornaments to access funds. Bajaj Finance accepts gold jewellery and ornaments of 18-22 purity.
Your loan amount is based on the assessed value of the eligible gold and the applicable LTV limit. Your gold is assessed in your presence for purity and net weight.
The valuation considers the lower of the previous day’s closing price or the 30-day average closing price for the relevant purity, as published by IBJA or a SEBI-regulated commodity exchange. Only the intrinsic gold value is considered, while stones, gems and embellishments are excluded.
Gold loan against gold coins
You can also pledge eligible gold coins for a gold loan. Bajaj Finance accepts gold coins of up to 24 karat purity.
The aggregate weight of gold coins pledged across all loans cannot exceed 50 g for a borrower. The overall loan exposure across eligible ornaments, jewellery and gold coins cannot exceed Rs. 2 crore.
The value of the coins is assessed based on their eligible purity, net gold content and the applicable valuation method. The final loan amount also depends on the applicable LTV limit and your eligibility.
Term loan vs overdraft gold loan
A term gold loan provides a sanctioned loan amount against eligible gold, with repayment according to the applicable loan structure.
A gold overdraft works differently because it provides a sanctioned credit limit that you can use as required. However, Bajaj Finance does not offer a gold overdraft facility. Bajaj Finance offers term gold loans against eligible gold collateral.
If you are considering a gold loan from Bajaj Finance, you therefore need to understand the applicable term loan and repayment structure rather than compare it with a gold overdraft offered by another lender.
Repayment options for Bajaj Finance Gold Loan
Your repayment structure determines when you need to pay the interest and principal.
- Bullet repayment: In bullet repayment gold loan, the principal and interest due are paid at maturity.
- Regular repayment: In regular repayment, the interest due is paid at half-yearly intervals as per the repayment schedule, while principal is paid at maturity.
- Part-prepayment: You can make part-prepayments without additional charges.
- Foreclosure: You can foreclose the loan without additional charges.
Bajaj Finance does not offer an EMI facility for its gold loan. The repayment structure applicable to your loan determines when your payments are due.
Pro tip: Planning to use your gold for quick funds? Check your gold loan eligibility now and see how much you can borrow now.
Gold loan against jewellery vs gold coins
Both jewellery and gold coins can be used as collateral, but the eligible purity and weight limits differ.
| Feature | Gold jewellery and ornaments | Gold coins |
|---|---|---|
| Eligible purity | 18-22 | Up to 24 karat |
| Weight limit | Total pledged ornament weight across all loans cannot exceed 1 kg | Aggregate pledged coin weight cannot exceed 50 g |
| Valuation | Based on eligible gold content, purity, net weight and applicable benchmark | Based on eligible gold content, purity, net weight and applicable benchmark |
| Loan amount | Depends on assessed value and applicable LTV | Depends on assessed value and applicable LTV |
Your final loan amount is determined after assessing the eligible gold and applying the applicable LTV limit.
Bank gold loan vs NBFC gold loan
Banks and NBFCs may offer gold loans with different interest rates, processing requirements, valuation methods, service channels and loan policies. Therefore, you should compare the actual terms offered by each lender instead of assuming that one type of lender will always provide a higher loan amount or faster processing.
When comparing a gold loan, check:
- Applicable interest rate
- Loan amount and LTV limit
- Gold valuation method
- Processing and other applicable charges
- Repayment structure
- Part-prepayment and foreclosure charges
- Gold storage and insurance
- Eligibility and credit checks
This helps you understand the overall cost and terms before you pledge your gold.
Latest RBI-aligned gold loan LTV rules
The LTV limits are:
- Up to Rs. 2.5 lakh: up to 85% LTV
- Above Rs. 2.5 lakh to Rs. 5 lakh: up to 80% LTV
- Above Rs. 5 lakh to Rs. 2 crore: up to 75% LTV
The applicable LTV ratio must be maintained during the loan tenure. For bullet repayment loans, the amount includes principal and interest payable at maturity.
How is the value of gold determined for a gold loan?
The value of your eligible gold is determined using its purity, net weight and the applicable gold price benchmark.
Your gold is assessed in your presence. The valuation considers the lower of the previous day’s closing price or the 30-day average closing price for the relevant purity, as published by IBJA or a SEBI-regulated commodity exchange.
Only the intrinsic gold value is considered. Stones, gems and embellishments are excluded from the valuation.
Factors to consider before choosing a gold loan type
Before applying, look beyond the loan amount and consider the complete borrowing cost and repayment requirements.
- Interest rate: Check the applicable interest rate and understand how it affects your total interest payable. Bajaj Finance Gold Loan interest rates are from 9.50% to 24.25% p.a.
- Loan amount and LTV: The loan amount depends on your assessed gold value and the applicable LTV limit. A higher gold value does not automatically mean that you can borrow the full assessed value.
- Gold valuation: Check how the lender values your gold. At Bajaj Finance, the valuation uses the lower of the previous day’s closing price or the 30-day average closing price for the relevant purity, as published by IBJA or a SEBI-regulated commodity exchange.
- Repayment structure: Understand when you need to pay interest and principal. Under bullet repayment, both principal and interest due are paid at maturity. Under regular repayment, interest is paid at half-yearly intervals as per the repayment schedule, while principal is paid at maturity.
- Charges: Review processing fees, stamp duty and other applicable charges before applying. Understanding the complete cost can help you plan your repayment.
- Gold security: Check how the lender stores and protects your pledged gold. Bajaj Finance provides secure storage and free insurance against theft, burglary, fire at the branch and misplacement while the gold is in its custody.
Which type of gold loan has the lowest interest rate?
The lowest gold loan interest rate in India typically comes from secured loans with high-purity gold and short tenures.
If you are looking for short-term financing with flexibility, Bajaj Finance offers interest rates tailored to suit your varying financial needs. You can get transparent pricing, while receiving fair valuations and the best possible loan terms. We further simplify the borrowing process with quick approvals and minimal documentation, allowing customers to access funds without unnecessary delays.
Which type of gold loan should you choose?
The right online gold loan depends on the type of eligible gold you have, the amount you need and the repayment structure that applies to your loan.
If you have eligible jewellery or ornaments, you can consider a gold loan against them. If you have eligible gold coins, you can also use them as collateral within the applicable limits.
Before applying, compare the loan amount, LTV, interest rate, valuation method, charges and repayment structure. This helps you understand the loan terms and choose an option that matches your financial requirement.
To avail quick funds to manage your needs, check your eligibility today, apply online and track loan status from the comfort of their homes. The online application process is seamless, saving time and effort while ensuring fast disbursement of funds.
Can you convert a bullet gold loan to EMI-based gold loan?
Bajaj Finance does not offer an EMI facility for its gold loan. Therefore, you should choose and understand the applicable repayment structure when you apply.
Under bullet repayment, principal and interest due are paid at maturity. Under regular repayment, interest is paid at half-yearly intervals as per the repayment schedule, while principal is paid at maturity.
Gold loan renewal and top-up options
If you are an existing Bajaj Finance customer, you may be able to renew or take a top-up on your gold loan before maturity.
- Renewal: You can request renewal before maturity if your loan remains in standard status and within the permissible LTV limit. For bullet repayment loans, accrued interest must be cleared before renewal. Renewal involves credit checks and fresh applicable charges. Renewal is not allowed after maturity.
- Top-up: You can request a top-up before maturity, subject to the applicable LTV limit, credit assessment and eligibility. Fresh fees and charges apply. A top-up cannot be taken after maturity, even if dues remain outstanding.
Calculate your gold loan
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Check your eligibility for gold loan
Gold loan eligibility with Bajaj Finance is simple and based on a few basic factors. You need to be an Indian citizen aged between 21 to 80 years and have gold jewellery or ornaments of the required purity, 18-22 karat, to pledge. You can also pledge gold coins up to 24 karat purity. However, the quality and weight of your gold directly affect your loan amount because Bajaj Finance determines the value based on purity and lower of the previous day’s closing price or the 30-day average closing price published by IBJA or a SEBI-regulated commodity exchange to evaluate the gold. Meeting these criteria ensures a quick approval process and higher loan value.
Curious about your loan eligibility? Enter your mobile number to see how much you can get for your gold.
Gold loan fees and charges
When you take a gold loan, the interest rate is a key factor in determining how much you pay over the loan tenure. Bajaj Finance offers low gold loan interest rates, ranging from 9.50% to 24.25%, making it an affordable choice. However, it is important to remember that apart from the interest rate, there are other charges that can affect the total cost of your loan. These include processing fees for handling your application, convenience fees for digital services, and stamp duty which is a government-imposed charge on documentation. Understanding these charges upfront ensures there are no surprises later and helps you plan your repayment better.
Frequently asked questions
Loan Repayment
A bullet repayment gold loan allows you to pay both principal and interest due are paid at maturity. This repayment method provides financial flexibility, especially for those expecting a lump sum income later.
An overdraft gold loan provides a credit line against pledged gold, allowing borrowers to withdraw funds as needed up to the sanctioned limit. Interest is charged only on the utilised amount, making it cost-effective for managing cash flow. However, Bajaj Finance does not offer this facility.
Gold loans are an excellent financial solution for farmers, providing quick access to funds to support agricultural activities. These loans come with low interest rates and convenient repayment options, helping farmers manage expenses. With minimal documentation and fast processing, gold loans enable farmers to secure the necessary funds without lengthy approval processes. Click here to check your gold loan eligibility today!
No, Bajaj Finance Gold Loan only offers one type of gold loan that is open to all Indian citizens between ages of 21 and 80 years. Check your eligibility to apply for a gold loan and get maximum value for your gold.
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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. *