Gold Loan Interest Rates

Gold Loan Interest Rates


The interest rates on gold loan, availed by pledging gold, are relatively lower than other types of loans and range between 7.35% to 29% p.a. Banks and other financial institutions in India offer gold loans, the loan amount for which ranges from Rs.1500 to Rs.1.5 crore. The repayment tenure of these gold loans ranges between 7 days to 240 months.

Gold Loan Details

Interest Rate7.35% p.a. onwards
Loan AmountUp to Rs.1 crore
Loan TenureUp to 20 years
Processing Fee0.5% the loan amount + GST onwards

Gold Loan Interest Rates Comparison 2022


Gold loans are usually taken for shorter periods to fulfill immediate upcoming requirements like paying for a child’s education, planning a wedding, taking care of a medical emergency, etc.

Loan Amount Per Gram of Gold

Several lenders provide you loans on pledging gold at attractive interest rates. The loan amount varies based on the weight of gold that you pledge. The loan amount per gram is a figure that varies across banks.

Factors Affecting Gold Loan Interest Rates

  1. Price of gold in the market
  2. If the price of gold is high in the market, the value of the gold ornaments or coins being pledged by you will also be high. Lenders will offer you a lower interest rate in such cases since the risk associated is low and if ,for some reason, you are unable to make the equated monthly instalments (EMIs), the lender can easily recover the outstanding amount by selling/auctioning the gold ornaments.

  3. Inflation
  4. If the rate of inflation is high, the value of currency depreciates and hence, people tend to accumulate more gold. Gold acts as a hedge against inflationary conditions especially when they persist for a longer period. This, in turn, pushes the prices of gold higher and in such time if you wish to avail a gold loan, you may get lower interest rates from lenders.

  5. Relationship with the bank
  6. Most lenders offer gold loans to their existing customers, though, in some cases, individuals who have no history with the bank can also avail gold loans. However, existing customers of banks/lending institutions are typically in a better position to negotiate for a lower interest rate.

FAQs on Gold Loan Interest Rates

  1. Will the interest rate on my gold loan vary with the kind of gold ornaments I pledge?
  2. The interest rate on gold loans will vary depending on the kind and purity of the gold ornaments you pledge. The purity of gold will also affect the amount of loan sanctioned by the lender. To avail a gold loan, the gold ornaments should be in the karat range of 18k to 24k which will be verified by the jewelry appraiser in the bank. If the gold ornaments are studded with precious stones, the weight of the latter will be excluded from the calculations.

  3. Will my credit score have any effect on the interest rate on my gold loan?
  4. No, lenders will not take into account your credit score when you apply for a gold loan. If you are above 18 years of age and have documents to prove your ownership of the gold, you can apply for a gold loan.

  5. I am a farmer. Can I get a discount on the gold loan interest rates?
  6. Yes. Since agriculture falls under the priority sector, farmers who wish to avail gold loans to fund their agriculture infrastructure or to meet their other farming-related activities, can get a rebate on the interest rates. The rebate can range between 1% and 2% and hence, they can get gold loans at an interest rate as low as 8%.

  7. How do I repay the gold loan I have availed?
  8. You can choose to repay your gold loan either by cash, funds transfer, demand draft (DD), or cheque.

  9. Is there an option to make a part-payment of the gold loan?
  10. Most lenders will offer the facility of part-prepayment but may charge a penalty. Ensure that you check for the charges before you decide to make a part-payment on your gold loan. However, to get your gold ornaments back, you will have to repay the entire outstanding amount. Having said that, there are some lenders who will be ready to release a part of your gold ornaments, in case you need it.

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