What Are Gold Loans and How Do They Work

What Are Gold Loans and How Do They Work

Learn all about gold loans and get up to Rs. 2 crore to manage your expenses better. To avail best loan value, check your gold loan eligibility today!

Rs. 5,000 - Rs. 2 crore

To find the nearest gold loan branch,

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Understanding the cultural significance of gold in India

Gold in India is more than just a shiny piece of jewellery; it is a part of our traditions, celebrations, and security blanket in tough times. Beyond its beauty and status, gold holds a special place because it can be used as collateral for a loan when quick funds are needed. Over the last few years, especially after the pandemic, more people have turned to gold loans as a practical solution during financial challenges. This rise is not surprising, given gold’s steady value and reliability. If you want to make the most of this option, it is important to understand how the gold loan process works in India and how it can help you in times of need.


What is a gold loan?


A gold loan, also known as a loan against gold, is a secured loan where you pledge your gold jewellery—usually ranging between 18-22 karats—as collateral. The lender offers a loan amount that is typically up to 75% of the gold’s current market value, depending on its purity and weight.


Unlike other secured loans, gold loans do not have a complicated process and lengthy paperwork. The interest rates on a gold loan can vary depending on the lender and their specified eligibility parameters. Though the interest rates for the gold loan are comparatively lower than its unsecured counterparts.


Additionally, facilities like attractive gold loan rate per gram, minimal documentation, multiple repayment tenures and hassle-free disbursal, makes gold loans a reliable source of quick finance from Rs. 5,000 to Rs. 2 crore. 


Do not let your jewellery sit idle—tap into its value with a gold loan that suits your needs. Check your gold loan eligibility today! 


How does a gold loan work?


loan against gold is a unique credit option because of its working principle. Here is how gold loan works:


Online application

To apply for a gold loan, you just need to fill out an online application form. You need to provide all the necessary details in the form and submit. Or if it suits you better, you can also visit the nearest gold loan branch to avail of the loan offline.
 

Evaluation of gold

This is where the gold loan process is different from that of other financial products. After applying for credit, the gold pledged as collateral will be evaluated using the state-of-the-art karat metres to assess its purity and weight, considering the prevailing gold price. Based on this evaluation, we determine the exact loan amount that an individual is eligible for.
 

RBI cap on LTV for gold loans

Here, you must note that RBI has capped the LTV ratio of a gold loan up to 75%. Lenders extend the loan amount to the applicant based on the evaluation and market price of pledged gold. Currently, Bajaj Finance only accepts gold jewellery worth 18-22 karats as a collateral against the loan. In this regard, you can use a gold loan calculator beforehand to assess repayment liability. This online tool displays accurate results within seconds and allows you to plan and manage your finances efficiently.


Eligibility and documentation

The next step on how this credit facility works is the eligibility and documentation. Being a secured credit option, gold loans do not impose strict eligibility and documentation. However, you need to be an Indian citizen, aged between 21 to 70 years, to avail of this loan. You would also need to provide your basic KYC documents for gold loan and address proof to complete the verification process.


Credit approval

After evaluating gold articles, documentation and signing of a loan agreement, the credit disbursal process begins. Finally, borrowers will receive their desired loan amount into their registered account. The entire gold loan process from application to disbursal takes just one branch visit to complete and ensures a hassle-free loan procedure.
 

Who is eligible to apply for a gold loan?


To apply for a gold loan, you need to meet some basic eligibility conditions. Any Indian citizen between the ages of 21 to 70 years can apply. You must own gold jewellery that falls within the 18-22 karat range, as this will be pledged as security for the loan. Bajaj Finance does not ask for income proof or high credit score, making the loan easy to get for a broader section of the economy. You will need to get your gold jewellery and provide basic KYC documents for gold loan. Since the loan is secured against physical gold jewellery, the approval process is usually quick. With us, your loan amount is often disbursed on the same day after verifying the gold’s purity and weight.


Curious about your loan eligibility? Enter your mobile number to see how much you can get for your gold.


What is the interest rate on which lenders give the gold loan?


The interest rate on a gold loan depends on the lender, the loan amount, and the repayment terms. For Bajaj Finserv Gold Loan, the interest rate usually starts from as low as 9.50% to 24% per annum, but it can vary based on the gold’s purity, loan-to-value ratio, and repayment schedule chosen by the borrower.


Gold loans generally have lower interest rates compared to unsecured loans because your gold acts as security. Since lenders have the gold as collateral, they take less risk, which helps in offering better rates. With Bajaj Finance, you also get multiple repayment options, like paying interest regularly and the principal at the end of the tenure. The gold loan interest rate depends largely on:


  • Purity and net weight of your gold
  • Current market price of gold
  • Loan amount and chosen tenure

To know the exact rate applicable to your requirement, you can check your gold loan eligibility online or visit the nearest Bajaj Finserv Gold Loan branch.


What type of gold jewellery can you submit as collateral?


Irrespective of your employment status, you can qualify for this credit if you possess gold jewellery to obtain funds against it.


However, one must note that this credit facility is available only against pure and fine gold jewellery. Therefore, gold bars and coins will not be accepted as collateral for disbursing the loan amount.


With Bajaj Finserv Gold Loan, you get the benefit of flexible repayment options. In this case, you can pay the interest either monthly or quarterly and repay the principal and pending interest, if any, at the time of loan maturity.


Thus, the demand for this credit has significantly increased due to a hassle-free gold loan process and exclusive features. This trend will continue as gold prices are higher, allowing borrowers to avail themselves of a sizeable amount to meet varied requirements.


Turn your gold into instant support—handle any expense with ease. Check your gold loan eligibility and access funds when you need them most.

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Eligibility for gold loan

Anyone can apply for our gold loan, as long as they meet the basic gold loan eligibility criteria mentioned here. They will be asked to submit a few basic documents to complete their application process.

Eligibility criteria for gold loan

  • Be an Indian citizen
  • Be aged between 21 to 70 years
  • Have 18-22 karat gold jewellery to pledge  

Documents required for gold loan

  • Aadhaar card
  • Voter ID card
  • Passport
  • Driving licence
  • NREGA job card
  • Letter issued by National Population Registration

PAN card is not required. However, if you apply for a gold loan of Rs. 5 lakh or above you will be asked to submit your PAN card.

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How to apply for a gold loan

Applying for a gold loan with us is quick and easy. You can either visit the nearest Bajaj Finserv Gold Loan branch or apply online through the Bajaj Finserv App or official website from the comfort of your home. To apply online, just follow these easy steps:

  1. Click on “Apply” to initiate online application.
  2. Enter your 10-digit mobile number and click on “Get OTP.”
  3. Submit the OTP to verify your identity.
  4. Fill in your personal details and select the nearest gold loan branch.
  5. Download In-principal loan eligibility letter.

Once done, you will receive a call from our representative and guide you on the next steps.


Check your gold loan eligibility in seconds to know how much you can borrow—easy, accurate, and hassle-free.

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Disclaimer

Bajaj Finance Limited has the sole and absolute discretion, without assigning any reason to accept or reject any application. Terms and conditions apply*.