Gold Pawn: Meaning, definition, and similarities with Gold Loan

Explore gold pawning and see how it works. Read about gold loans and gold pawning and see how you can use your jewellery to get financial assistance when you need it the most.
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4 min
06 May 2025

Gold has always been a valuable commodity that people love to invest in. It is one of the most secure and safe investments, and therefore it is widely popular in India. People in India have been fascinated with gold for centuries and they love to hold onto it for generations.

As times change, individuals are adopting new approaches to handle their financial requirements. Whether it involves medical expenses, home renovations, or pursuing higher education, many people are now turning to taking loans against their gold assets as a solution to meet these expenses. These loans not only cover planned expenses but also act as a lifeline during unforeseen situations like hospitalisation or debt consolidation.

What do we mean by gold pawn?

Gold pawn or gold loan is essentially a type of loan where you can pledge your gold with a lender in exchange for funds. The loan amount sanctioned is dependent on the weight and current market value of the gold being pledged. It is a short-term loan that provides a quick solution to ensure that your financial needs are met without having to sell your gold.

A gold pawn, also known as a pawn loan or pawnbroking, is a financial transaction where you use your gold possessions as collateral to secure a loan from a pawnbroker. In a gold pawn transaction, you bring your gold items to a pawn shop, and the pawnbroker assesses their value. Based on the appraisal, the pawnbroker offers you a loan amount, typically a percentage of the gold's appraised value. If you accept the loan offer, you leave your gold items with the pawnbroker as collateral, and they give you the loan amount in cash. The pawnbroker holds onto your gold until you repay the loan, usually with interest, within a specified period. If you fail to repay the loan according to the terms agreed upon, the pawnbroker may keep your gold items and sell them to recover the loan amount.

Difference between gold pawn and gold loan

The main difference between a gold pawn and a gold loan lies in security parameters and potential consequences, especially considering regulatory oversight.

In a gold pawn, you surrender your gold item to a pawnbroker in exchange for a loan. The pawnbroker holds onto your item as collateral until you repay the loan with interest. If you fail to repay, the pawnbroker can sell your item to recover the loan amount.

On the other hand, a gold loan involves using your gold item as collateral to obtain a loan from a financial institution or lender, under RBI supervision. You retain ownership of your gold item while using it as security for the loan. If you fail to repay, the lender has the right to sell your gold item to recover the loan amount, but they typically offer more flexibility and options for repayment compared to pawnbrokers.

Gold loans are generally considered safer due to RBI regulations ensuring fair practices, transparent terms, and consumer protection. They often offer higher loan amounts, lower interest rates, and longer repayment periods, making them a more secure option for borrowers.

How to apply for a gold loan

Step-by-step guide to apply for a gold loan

  1. Click on ‘APPLY’ to open our online application form
  2. Enter your 10-digit mobile number and click on ‘GET OTP’
  3. Submit the OTP to verify your identity
  4. Select your state and city to find the branch nearest to you
  5. Enter your full name and date of birth as per your PAN
  6. Set up your appointment at our branch

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

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

Is it better to pawn or sell gold?

Gold pawn or getting a loan against gold is an easy way to get money in exchange for jewellery that may be lying idle at home. You get to keep the ownership of your gold jewellery and have the option to take it back partly or completely on repayment of the loan amount. You are merely using the gold as collateral to get access to funds.

Selling your jewellery, on the other hand, includes the permanent sale of your precious gold, meaning that the valuable family heirloom and the emotional value that comes with it, is lost forever.

If you need access to funds quickly, it may be a better idea to opt for gold pawn or applying for a gold loan.

Here is how we decide your gold loan amount.

Can you pawn real gold?

Generally, a pawn broker is only likely to offer you money in exchange for real gold. The money you are likely to get is on the basis of the value of the gold you are willing to pawn. This is true for gold loans too. RBI-registered lenders such as Bajaj Finance measure the purity of the gold you offer. You are only likely to get a gold loan if your gold jewellery is between 18 and 22 karat.

Learn about the eligibility criteria for gold loans and how easy it is to get one from Bajaj Finance.

How does pawning gold work?

Gold pawning is a financial transaction where you submit your gold as a collateral to get access to a pre-determined amount of money. To pawn your existing gold, you must visit a pawn shop or a pawn broker. At this point, the pawn broker is likely to ascertain the value of your gold based on its weight and purity. Gold of higher purity and value is likely to get you a larger amount.

While gold pawning may seem like a simpler option, experts suggest you approach a reputable gold loan lender to avail of a loan against it. Rather than visiting your local pawn broker, consider an option such as the Bajaj Finserv Gold Loan offers a safer, more reliable way to access money at an attractive interest rate.

Read more about how you can apply for a gold loan online

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