- A gold loan is secured by your gold, so approval is quick and your credit score matters less.
- RBI caps how much you can borrow against the gold’s value (LTV), and the cap depends on the loan size.
- Compare the total cost: interest rate, repayment type, fees and how the gold is stored and returned.
You hand over gold ornaments or coins to a bank or NBFC, and the lender gives you a loan against their value. When you repay, the gold is returned. Because the loan is secured, the process is faster than for an unsecured loan.
How much can you borrow?
The loan amount depends on the gold’s weight, purity and the lender’s valuation, and on the loan-to-value (LTV) cap. Under RBI’s gold and silver lending directions, effective 1 April 2026 for new loans, the caps are:
- up to 85% of the gold’s value for loans up to ₹2.5 lakh,
- up to 80% for loans above ₹2.5 lakh and up to ₹5 lakh,
- up to 75% for loans above ₹5 lakh.
For example, gold valued at ₹1,00,000 can fetch a loan of up to ₹85,000 in the smallest tier. Rules are updated from time to time, so confirm the current norms with the lender. Use the gold loan calculator to estimate your amount and repayment.
Repayment options
- EMI: principal and interest paid monthly.
- Monthly interest, principal at the end: lower monthly outgo, but you must clear the principal on time.
- Bullet repayment: everything paid at the end; RBI now limits how long such loans can run, so check the terms.
What to check before you borrow
- Interest rate and how it is charged (monthly or yearly, on the full amount or the outstanding).
- Processing fee, valuation fee and charges for late payment.
- Storage and insurance: where is your gold kept and is it insured?
- Return timeline: the lender should return the gold promptly after repayment.
- Auction rules: understand when and how the lender can sell the gold if you default.
A gold loan can be cheaper than an unsecured loan, but your gold is at stake. Compare it with a personal loan before deciding.
This article is for general information only and is not financial, legal or tax advice. Interest rates, fees and rules change, so confirm current terms with the lender or the regulator before you decide. Examples use illustrative figures. Last reviewed: October 2026.
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