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Taking a Gold Loan? Here's What You Need To Keep In Mind


Many Indian households believe in investing in gold for emergencies, and rightly so.

If you need urgent cash, you can get a gold loan by keeping gold as collateral. However, it’s essential to keep certain factors in mind before applying for the loan.

These factors include gold loan requirements ,interest rates, and payment terms. It will help in finding the best gold loan to support your financial situation.

Here are the crucial factors to know while applying for a gold loan. Keep reading to know more!&

Key Highlights

  • Comparing multiple lenders is essential to find a suitable gold loan.
  • The gold loan purity must be within 18-24 karats for a loan.
  • To apply for a gold loan, one must be between 18-70 years old.
  • Evaluate the loan provider’s credibility before the loan application.

Gold Purity

The maximum loan amount the borrower receives from a lender depends on the gold’s purity. Plus, it’s important to have gold jewellery with a purity of 18 karats or more. For instance, Shriram Finance accepts jewellery with purity of 18 to 22K.

In addition, focus on the provider's Loan-to-Value ratio. It determines your maximum loan amount against the collateral. If the company provides an LTV ratio of 75% and you have 18-25K gold, you'll get a decent amount.

Try to verify gold's purity from a local jeweller before applying for the loan amount.

Note: Even if the borrower has a golden necklace studded with emeralds, the loan provider will only consider the gold in it.


Next, check the eligibility criteria of the lender to see if you fulfil them. These rules include the following:

  • The basic age limit is 18 to 70 for most lenders
  • The applicant must be an Indian citizen
  • The gold collateral must be worth 18 karats or above
  • Source of income - salaried or self-employed

In addition, you will require some KYC documents during the application. These might include an Aadhar card, PAN card, Voter ID, bank statements and passport.

It is vital to secure physical and digital copies of these documents to complete the application successfully.

Payment Terms

One of the vital gold loan requirements is simple payment terms. You have to understand the payment options provided by the lender. These options must always match your income and current financial position.

Most gold loan providers have three primary payment options:

  • Monthly payments through EMIs
  • Bullet payments, where borrower pays the interest and the principal amount after a specified tenure

Another option is to pay the interest in monthly instalments and the principal after the loan maturity period. Check out the associated payment steps to see which lender offers maximum convenience.

So, if one is financially unstable, they must choose the loan provider with the most flexible payment options.

Interest Rates

The applicant must focus on the interest rates on gold loans to find a suitable lender. Affordable interest rates will help in handling loan payments wisely.

Loan providers like Shriram Finance offer a starting interest rate of 11.5%*.Sometimes, the interest rate depends upon the loan amount and current gold valuation.

The provider's risk assessment, LTV ratio, and loan tenure also affect the interest rates. Further, while researching the interest rates on gold loans , check out the associated fees too.

Loan Tenure

Loan tenure is an essential factor to consider for ensuring convenient payments. Shriram Finance offers a loan tenure of 1 to 12 months.

Lender’s Reputation

Among the best tips to take gold loan is to select a provider with a spotless reputation. It is important as you will submit gold collateral to them for a substantial loan amount.

So, it’s crucial to ensure that the company will return the gold safely after repayment. Focus on the following factors:

  • See if the company is registered under RBI
  • Read their online customer reviews and testimonials
  • Understand the collateral security features they have

Summing Up

While learning how to take gold loan and the related factors, it’s important to consider your financial needs for selecting the right loan amount and provider.

Try to work on managing your finances better. Cultivate prudent financial habits like maintaining a budget and cutting unnecessary expenses. This way, paying off EMIs for the gold loan can be a lot more convenient.

You can always consult other loan applicants for more insights on tackling a loan and choosing a lender.


1. Is It Good To Take a Loan On Gold?

Yes, opting for a loan on gold is a great option when in need of additional funds. It will help you utilise gold assets effectively.

2. Can I Take Gold Loan From Shriram?

Absolutely! Shriram Finance offers hassle-free gold loans starting at an interest rate of 11.5%*. The maximum loan amount is 20 Lakhs, and there are no processing fees involved.

A gold purity of 18 to 22 karats will be sufficient to apply for a Shriram Finance gold loan.

3. How Much Gold Loan One Person Can Take?

Any individual can get up to 20 lakhs as a gold loan amount. It depends upon the lender and their maximum limit. Moreover, the gold purity will also affect the amount.

Established loan providers may provide a loan of around 75% of the gold's worth.

4. Can I Take Two Gold Loans From The Same Bank?

If you’ve taken a gold loan from a bank and repaid the amount in full, you can take another loan.

5. Can I Repay Gold Loan Early?

Yes, the borrower can pay off the loan instalments before the tenure ends and get the gold collateral back.

Get a gold loan at low interest rates