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Dream vacation, emergency expenses or alternate loan repayments, Urban Money takes care of your financial health via instant personal loans. With a maximum limit of ₹50 lakhs, we ensure you get the lowest personal interest rate, starting at 8% p.a.

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Gold Loan Features and Benefits

Gold loans offer numerous benefits to borrowers, including lower interest rates, quick disbursal, no credit score requirement, and more. 

1) Quick Loan Disbursal

Gold loans are processed faster compared to other loan types. Since the gold acts as collateral, lenders can easily sanction the loan without extensive documentation or credit checks, making it a great option for urgent financial needs.

2) No Credit Score Requirement

Unlike other loans, gold loans do not rely heavily on the borrower’s credit history. This makes them accessible to a wider range of individuals, including those with low or no credit scores. 

3) Competitive Interest Rates

Gold loans generally have lower interest rates compared to unsecured loans like personal loans. This is because the gold pledged acts as security, reducing the risk for lenders.

4) Flexible Loan Repayment Options

Gold loans offer flexible repayment options, including EMI-based repayment or bullet repayment at the end of the loan tenure. Borrowers can choose repayment terms that suit their financial situation.

5) High Loan-to-Value Ratio (LTV)

Gold loans typically provide a high loan-to-value ratio, allowing borrowers to secure a loan amount up to 75-90% of the gold's market value. This ensures that borrowers can maximize the value of their pledged gold. 

6) Retention of Gold Ownership

Even though the gold is pledged as collateral, ownership remains with the borrower. Once the loan is repaid, the gold is returned safely to its owner. 

Gold Loan Overview

Gold loans have become a popular financing option due to their convenience and speed. To avail of a gold loan, the borrower pledges gold ornaments or coins to the lender, and the loan amount is disbursed based on the gold's purity and weight. The pledged gold remains with the lender until the loan is repaid. 

Gold loans can be used for various purposes, such as meeting personal expenses, funding business needs, or paying for medical emergencies. However, borrowers should carefully assess the gold loan interest rate and repayment terms to avoid financial strain. 

Gold Loan Tax Benefits

While gold loans are not directly eligible for tax benefits, they can indirectly help reduce taxable income when used for certain purposes like business expansion or home construction. Borrowers should consult a tax advisor for guidance. 

Particulars Details
Loan-to-Value Ratio (LTV) Up to 90% of gold's market value
Repayment Options

a. Regular EMIs

b. Bullet repayment

Interest Rates Lower than unsecured loans

Reasons for Gold Loan Rejection

Some of the gold loan rejection reasons are given below:

  • Low purity of the pledged gold
  • Gold value not matching the loan amount requested
  • Applicant's age does not meet the eligibility criteria
  • Applicant’s address is on a defaulter’s list
  • Multiple rejected loan applications
  • Incomplete or incorrect documentation
  • Unsatisfactory credit score (if applicable)

How to Close an Existing Gold Loan?

A gold loan can be closed by repaying the loan amount in full or via foreclosure before the agreed tenure.

If you have completed the repayment tenure, you need to visit the lender, fill out the required closure form, and retrieve your gold pledged as collateral.

If you decide to foreclose before the end of the tenure, you will need to pay the outstanding loan amount along with foreclosure charges.

Gold Loan: Service Charges and Fees

These fees and charges are associated with gold loans throughout the loan tenure:

Processing Fees It is a one-time charge that the borrower pays for processing the loan application. This is non-refundable and paid in advance.
Application Fees This is a non-refundable fee charged when applying for a gold loan, generally ranging from Rs. 500 to Rs. 2,000.
Foreclosure Charges These charges are applied if you decide to pay off the loan amount before the tenure ends. The charges can range from 1% to 3% of the outstanding loan amount.
Loan Tenure The maximum tenure for a gold loan is generally 1 to 3 years, depending on the lender and loan amount.
Loan Amount The maximum loan amount can be up to 75% of the gold's market value, depending on the lender and the quality of the gold.

Types of Gold Loan

A gold loan isn't just a loan for urgent financial needs, and it can be used for various purposes, each with different interest rates.

1) Loan Against Gold

This is the most common type of gold loan. The bank lends a percentage of the gold's value, and the interest rates typically range from 9% to 24% depending on the lender.

2) Gold Overdraft

This is a type of gold loan where the borrower gets an overdraft facility secured by their gold. Interest is charged only on the amount withdrawn, making it a flexible option.

3) Gold Loan for Agriculture

This loan type is aimed at farmers who can use gold as collateral to meet agricultural needs like purchasing seeds, fertilizers, or machinery.

Required Gold Loan Documents

To avail of a gold loan, you need to provide the following documents:

Documents for Identity Proof

PAN and Aadhar Card Applicant's Passport
Voter ID Card Driving Licence

Documents for Address Proof

Utility bills (electricity or telephone bill) Salary slips of the last 3 months
Identity proof that contains address (like Aadhaar Card) Bank account statements

Other Documents

Passport-size photographs of the applicant Gold ownership proof (Bill of purchase or certification)

Essential Tips for First-Time Gold Loan Borrowers

Below are some essential tips to help first-time gold loan borrowers navigate the process smoothly:

1. Assess the Value of Your Gold

Make sure the gold you are pledging is of good quality and has a reasonable market value. A higher value can get you a larger loan amount.

2. Compare Multiple Loan Offers

Compare interest rates, processing fees, and terms from various lenders before choosing the best option.

3. Check for Hidden Charges

Be aware of any hidden charges like processing fees, foreclosure charges, and penal interest rates.

4. Understand the Loan Terms

Understand the terms of the loan, including repayment schedules, interest rates, and tenure before signing the agreement.

5. Repayment Plan

Plan your repayment carefully to avoid high interest charges and potential loss of your pledged gold.

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Frequently Asked Questions

A Gold Loan is a secured loan where you pledge your gold as collateral to secure a loan from a bank or financial institution.

You can apply for a Gold Loan by visiting a bank or lender’s branch, submitting the required documents, and pledging your gold as collateral.

You need to be at least 18 years old, have gold to pledge as collateral, and meet the lender’s KYC and credit requirements.

The loan amount is typically a percentage of the gold's market value, ranging from 60% to 90%, depending on the lender and the gold's purity.

Gold Loan interest rates can range from 7% to 15%, depending on the lender, loan amount, and tenure.

A Gold Loan can typically be approved in as little as 30 minutes to an hour, depending on the lender’s process.

Yes, Gold Loans are considered safe as they are secured loans. However, failure to repay may result in the forfeiture of the pledged gold.

Common documents required for a Gold Loan include identity proof (Aadhaar, PAN), address proof, and KYC documents.

Yes, Gold Loans can be repaid early, and most lenders do not charge prepayment penalties. However, you may incur certain charges.

The repayment tenure for a Gold Loan typically ranges from 3 months to 5 years, depending on the lender's terms.
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