Loan Against Gold – What You Should Know

Many times there are scenarios in which you need urgent cash. During the last year, due to Covid 19, many people have lost their jobs. Many of them still have not got new jobs. Surviving under such conditions is only possible if you have some savings on hand. one of my friends had lost his job due to Covid and is now looking for a loan against gold as that is the only resort left for him to survive till the time he gets a new job.

Today, in this article we will discuss about what is loan against gold and which is the best option for you to avail such loan.

What is loan against gold?

Loan against gold is the short-term loan provided by the banks and NBFCs against the physical gold. You have to mortgage your physical gold to the bank and the bank in turn will give you cash against the gold. Usually, the loan period is ranging from 12 months to 36 months depending upon the need of the borrower.

Banks usually give loans up to 80% of the gold’s market value on the day it is disbursed. There will be an EMI which the borrower needs to pay at regular intervals, usually monthly.

Banks/NBFCs have their own valuer who will assess the fair value of the gold ornaments and decide the amount of loan that the bank can sanction. The borrower also needs to furnish basic KYC documents like PAN card, ID proof, address proof to the banks. Once the loan is a sanction, the bank will deposit the amount to your bank account.

Gold Loan interest rates comparison

Bank / NBFCsInterest RatesProcessing FeeMax. Tenure
SBI Gold Loan Rates7.5%0.50% of the loan amount, minimum Rs. 50036 months
Canara Bank7.65%1% of the loan amount, Min Rs. 1,000 and Max Rs. 5,00012 months
Federal Bank8.5%Nil12 months
PNB8.75%0.70% of loan amount + taxes12 months
HDFC Bank Gold Loan Rates9.5%1.50% of the loan amount24 months
Yes Bank Gold Loan Rates9.99%0.75% or Rs 500 to 799, whichever is higher36 months
ICICI Bank10%1% of the loan amount12 months
IndusInd Bank10%Upto 1% of loan amount, minimum Rs. 75012 months
Andhra Bank10.7%Nil processing fees12 months
Muthoot Gold Loan Rates11.99%0.25% to 1% of loan amount.36 months
Manappuram Gold Loan Rates12%Rs. 10 (to be paid at time of settlement)12 months
Fincare Small Finance Bank12.99%Upto 0.5%9 Months
Axis Bank13%1% plus GST24 months
IIFL Finance12%Zero processing fees24 Months

Benefits of Gold Loan

Gold loan is the quick loan which can be avail easily against the physical gold. Here are the benefits of gold loan.

  • Easy loan process
  • Low-interest rates
  • No credit history required
  • No income proof required
  • Lowest processing fees (sometimes it’s zero)
  • Flexible repayment options
  • Highest loan to value (LTV)
  • Minimal documentation
  • Quick disbursement
  • Use of idle asset
  • Gold is safe

Get Lowest Gold Loan Interest Rate

Keep below points in mind if you want to get the best gold loan interest rates.

  • Check for the special offers. At times there are special offers available from the lender. These are the special days on which the interest rates are lower than the regular days. Grab the offer and you will get the cheapest loan rates.
  • Compare offers. Always compare available offers from all the banks. NBFCs are generally offering loans at higher interest rates. So you should check the bank’s offers to get the lowest interest rates.
  • Check Loan to Value Ratio. Higher the loan to value ratio, the higher the interest rates. So you should check the LTV ratio before you apply for the loan.
  • Check with your bank first. Check with your bank first, as there are special benefits and discounts available for the existing customers.
  • Go for minimum tenure. You will have to pay higher interest for the longer tenure. So go for the minimum tenure so that you don’t have to pay higher interest rates.
  • Go for reducing interest rates. Reducing interest rates as the name suggests, you will have to pay the interest on the reducing amount. so the interest burden will go down month on month.
  • Loan processing fees. Compare processing fees of all the banks and NBFCs. Select the one which offers the lowest processing fees.


A gold loan is a good option for short-term needs. however, you should go for it as a last resort. Because mortgaging your physical asset is never a good idea. But in dire need, this turns out to be a lifesaver. A loan against gold is cheaper than a personal loan. So at times, it is the best option one should go for.

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