The right gold depends on your purpose. 22K gold is commonly preferred for jewellery because it offers a balance of purity and strength, while 24K gold has higher purity but is softer. For a Gold Loan, eligibility depends on accepted purity, net gold weight, applicable gold rate and LTV, so purity can affect the loan amount.
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In summary
The lending against gold means using eligible gold as collateral to borrow funds without selling the gold. The loan amount depends on the gold’s purity, net weight, applicable gold rate and LTV.
- Understand how lending against gold works and who can apply.
- Check your gold’s purity and net weight before estimating its value.
- Calculate the potential loan amount using the applicable gold rate and LTV.
- Review interest rates, tenure, repayment options and charges before applying.
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What is lending against gold and how does it work?
A lending against gold is one of the easiest ways to access quick funds without selling your gold. You simply pledge your gold jewellery, ornaments, or coins as collateral and receive the funds you need, whether it is for a medical emergency, education, business needs, or other personal expenses. The best part is that you continue to own your gold, and once you repay the loan, it is returned to you. Explore how lending against gold works, its key benefits, and the simple process of applying for a gold loan.
What is a loan against gold?
A loan against gold, also known as a gold loan or gold-backed loan, is a type of secured loan where you pledge your 18-22 karat gold jewellery and ornaments, or 24 karat gold coins as collateral to obtain funds from a financial institution or lender. The loan amount you receive can go up to a maximum of 85% of the gold's value, known as the loan-to-value (LTV) ratio.
Bajaj Finance considers 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 loan amount against your gold. The primary advantage of a loan against gold is that it allows you to access quick funds without selling your precious assets. Gold is widely accepted as collateral due to its inherent value and global market liquidity.
You can get a gold loan at lower interest rates compared to unsecured loans because the gold jewellery acts as security.
Why choose lending against gold?
Gold loans are a smart and quick way to secure funds by pledging your gold jewellery. Bajaj Finance offers a streamlined process with minimal documentation and no need for income proof, making it ideal for urgent financial needs.
Since the loan is backed by gold, the approval is fast and interest rates are usually lower than unsecured loans. Your gold remains safely stored in secure vaults, and you retain ownership during the loan tenure.
Key highlights:
- Quick access to funds: Pledge your gold and get instant liquidity without selling it.
- Minimal paperwork: No need for income proof or credit history.
- Gold loan interest rates and tenure: Your gold is kept in monitored, insured vaults.
- Flexible usage: Use the funds for education, healthcare, or other personal needs.
- Convenient repayment: Choose from multiple gold loan repayment options that suit your financial planning, such as monthly, bi-monthly, or annual interest payments.
Gold loans offer both security and flexibility in one trusted solution.
Tip: Apply in minutes. Money in account instantly with a Bajaj Finance Gold Loan*
What documents do you need for lending against gold?
When applying for a Bajaj Finance Gold Loan, only a few essential documents are needed, making the process quick and convenient.
These documents help verify your identity and ensure regulatory compliance.
The documents include:
- 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.
In most cases, no income proof or credit score check is required. The simplicity of this documentation process, along with the security of your pledged gold, makes applying for a gold loan both convenient and efficient.
How is the loan amount determined?
The loan amount offered under a gold loan depends mainly on the purity and net weight of your gold. Bajaj Finance evaluates your gold based on the market value, purity, and the prevailing gold rate. The purer and heavier the gold, the higher the value you can receive.
Another important aspect is the Loan-to-Value (LTV) ratio, which is regulated by the Reserve Bank of India and usually capped at 85% of the gold’s value. The maximum LTV eligible for consumption loans per borrower depends on the loan amount and cannot be more than the limits given:
1. For loans up to Rs. 2.5 lakh = LTV 85%
2. For loans between more than Rs. 2.5 lakh to Rs. 5 lakh = LTV 80%
3. For loans from more than Rs. 5 lakh up to Rs. 2 crore = 75%
For instance, if the gold rate is favourable, you may be able to avail a higher loan for the same gold compared to periods when gold prices are low. To estimate how much you can borrow, you can use the gold loan calculator from Bajaj Finance. With the tool, you can get quick evaluation and transparent procedures for determining your loan eligibility.
Factors affecting gold loan approval
Approval for a loan against gold is generally quick, but lenders assess a few important factors before determining your eligible loan amount. Understanding these factors can help you prepare your application and speed up the approval process.
- Gold purity: Lenders generally accept gold jewellery and ornaments between 18-22 karat, while eligible gold coins up to 24 karat purity may also be accepted. Higher-purity gold (like 24K purity) usually receives a higher valuation.
- Gold weight: The weight of the actual gold content directly influences the value of the pledged gold and the eligible loan amount.
- Loan-to-Value (LTV) ratio: The final loan amount depends on the applicable LTV ratio as per RBI guidelines and the lender's policy.
- KYC documents: Valid identity and address proof are required to complete the Know Your Customer (KYC) verification process.
- Credit assessment: Although a high credit score is not mandatory for a loan against gold, lenders may review your repayment history depending on the loan amount and applicable policy.
Get a clear idea of your loan value by checking your gold loan eligibility. Fast approval and convenient repayment options await.
Which loan against gold plans have the lowest total cost for a one-year loan of ₹1 lakh?
The total cost of a loan against gold depends on more than just the interest rate. Factors such as processing fees, repayment option, loan tenure, and any applicable charges also affect the overall borrowing cost. Before choosing a loan, compare all these aspects to identify the most cost-effective option for your financial needs.
- Compare interest rates: A lower interest rate generally reduces the total interest payable over one year.
- Check processing fees: Low or nominal processing charges can help lower the overall loan cost.
- Review repayment options: Choose a repayment method that suits your cash flow and helps manage interest efficiently.
- Look for foreclosure charges: Plans with low or no foreclosure charges can reduce costs if you repay early.
- Evaluate the total borrowing cost: Consider interest, fees, and other applicable charges together instead of focusing only on the interest rate.
Comparing these factors can help you select a loan against gold plan that offers the lowest overall cost while meeting your funding requirements.
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Gold loan interest rates and tenure
The interest rates and repayment tenure for gold loans are two crucial elements that affect your borrowing experience. Gold loan interest rates are typically lower than unsecured personal loans because the loan is secured against your gold.
Bajaj Finance offers interest rates from 9.50% to 24.25% p.a., making it an affordable option during financial emergencies. In terms of tenure, most gold loans come with multiple repayment options. You can choose to pay the interest monthly, quarterly, half-yearly, or even annually. There is also an option to pay only the interest during the loan term and the principal at maturity.
This flexibility makes gold loans attractive for individuals looking for short-term funds. To explore the latest options and to check if you qualify for a gold loan at lower interest rates, you can check your loan eligibility on our App or website.
Quick tip: Planning to use your gold for quick funds? Check your gold loan eligibility now and see how much you can borrow instantly.
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Eligibility criteria for gold loan
To apply for a gold loan, you must meet specific eligibility criteria. Bajaj Finance ensures a simple process so that you can access funds easily by pledging your gold. The basic eligibility criteria for gold loan include:
- Applicant must be an Indian citizen
- Age must be between 21 to 80 years
- You must own gold jewellery or ornaments of 18-22 karat purity
- You can also pledge gold coins up to 24 karat purity
For detailed information, visit the eligibility criteria for gold loan page. Meeting these requirements ensures a quick and smooth loan approval process.
Do not let your gold sit idle—tap into its value with a gold loan that suits your needs. Check your gold loan eligibility today!
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How to apply for a loan against gold
You can initiate the process by assessing the value of the jewellery you intend to offer as collateral. You can use the free Bajaj Finance online gold loan calculator. By entering either the weight of your gold in grams or the desired loan amount, the calculator will provide an estimate of your loan liability.
The advantage of gold loans is that they eliminate the need for extensive and time-consuming paperwork, as your gold acts as collateral. You will only be required to present one of your KYC documents for gold loan, to avail a Bajaj Finance Gold Loan.
Leverage the underlying value of your unused gold to meet your immediate funding requirements. Follow a few simple steps to ensure a quick disbursement of your gold loan.
- Step 1: Visit the Gold Loan section of the website
- Step 2: Click on the online application form
- Step 2: Enter your 10-digit mobile number and click on ‘GET OTP’
- Step 3: Enter OTP to verify your details
- Step 4: Fill in your personal details and choose the nearest gold loan branch
- Step 5: Download the in-principle loan eligibility letter
Once done, you will receive a call from our representative and guide you on the next steps.
You can enjoy the convenience of selecting a time that suits you best and visiting our branch with your gold. Our team will evaluate the purity of your gold and initiate the loan application process. With a vast network of over 1400 branches nationwide, we are committed to processing your loan application swiftly and efficiently, ensuring a seamless and trouble-free experience for you.
Tip: It takes just 2 steps to check your eligibility for a Bajaj Finance Gold Loan. Enter your mobile number now.
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Frequently asked questions
Gold Loan
Repayment
Can I renew a gold loan after the term ends?
Yes, Bajaj Finance allows easy renewal of your gold loan once the original tenure ends. You can re-pledge the same gold ornaments, and the lender will re-evaluate them as per the current market rate before sanctioning a new loan.
What is a loan against gold and how does the application process work?
A loan against gold is a secured loan where you pledge eligible gold jewellery, ornaments, or gold coins as collateral to borrow funds. The lender assesses the purity and weight of the pledged gold, determines its value, and calculates the eligible loan amount based on the applicable Loan-to-Value (LTV) ratio. To apply, visit a branch or apply online, submit valid KYC documents, complete the gold valuation process, and, once approved, receive the loan amount. In many cases, the funds are disbursed on the same day*.
Is my gold safe with the lender during the loan tenure?
Yes, your gold remains secure in highly protected, insured vaults during the entire loan period when you borrow from Bajaj Finance. The pledged gold is also insured against theft and misplacement.
What happens if I fail to repay the gold loan?
If you do not repay the loan on time, Bajaj Finance will provide reminders. However, prolonged non-repayment may lead to auctioning the pledged gold to recover the outstanding dues.
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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. *