Things to Keep in Mind While Applying for a Gold Loan


  • Want to choose the best gold loan for you?
  • Evaluate all crucial points - Tenure, Interest Rates, Lender’s Credibility, among others!

There is no doubt about the fact that a gold loan can come to your rescue in the times when you need urgent funds. Provided by several banks and financial institutions, a gold loan can be availed by anyone who has some idle gold sitting in their homes. You just have to submit it to the lender, against which you will get the loan amount at an affordable rate of interest. This factor alone makes a gold loan as one of the best and easy loan options today. Also due to the secured nature of a gold loan, it brings a certain credit mix in your profile.

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But as easy as it sounds, there are some things a lot of people forget while applying for the gold loan. So, in this article, we would tell you about those things which you must keep in mind before choosing the best lender to opt for a gold loan. If you are someone who is facing an urgent need for funds and looking to opt for a gold loan, these factors will guide you to select the best lender according to your requirements.

You can have a look at these methods below.

The credibility of the Lender

As we told you to get a gold loan, you need to submit your gold as the collateral or security to the lender. The lender will return your gold ornaments and gold coins after the repayment of the loan. Some lenders also release your gold on part prepayment of the loan in case of any emergency. But have you ever thought of a situation where the lender is a fraud and even after making the full repayment, you would not get your gold back?

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Well, to avoid such situations, you must check the credibility of the lender from which you are opting for a gold loan. Remember to choose your lender as a reputed public or private bank or Non-Banking Financial Companies (NBFCs) so that your gold remains safe with them. Always research about the lender from which you are seeking a loan. Factors like the customer reviews of the loan facility provided by them, their safety measures for your gold and other things should be checked.

Loan Amount

This is one of the most important factors to look at while applying for a gold loan. Several lenders provide gold loans but the gold loan amounts differ from one bank to another. Know this thing that no lender gives 100% of your gold value as the loan amount. It usually ranges from 65% to a maximum of 85% – 90% of the overall gold value.

So, for example, your overall gold value is INR 10 lakh, you can get a maximum loan amount of INR 9 lakh from any of the lenders. So it is important to check the features of the respective lender so that you can make a better decision while choosing the highest loan-to-value (LTV) ratio for your gold loan facility.

Rate of Interest

It is the most crucial factor in deciding your repayment amount because of the direct effect it has. So, always choose a lender with the lowest interest rates so that you don’t have a higher repayment amount. Different lenders provide gold loans at different rates of interest, that’s why it is important to choose the lender that can provide you affordable interest rates while fulfilling your other requirements too.

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Repayment Methods

This is a major factor that a lot of people tend to ignore while applying for a gold loan. As compared to other loans, gold loans provide pretty flexible repayment methods to customers. So, check the repayment methods that your lender is providing on your gold loans. Some lenders let you pay the interest amount upfront and pay the principal amount at the end of tenure, while some let you pay the interest amount on a monthly, quarterly, semi-yearly, or yearly basis and pay the total principal amount at the end of the tenure. You can also opt for the EMI repayment method where you need to pay a portion of both principal and interest amount every month. Apart from all these methods, some lenders also provide a Bullet Repayment method where you have to pay the principal and interest amount at the end of the tenure.

So, it is important to check what kind of repayment method you want to opt for while choosing a suitable lender for you.


Generally, the tenure of the gold loan is short – ranging from 12 to 48 months. So, it is important to check your repayment capacity before opting for the gold loan from any lender. Because any missing payment will impact your credit score and you may have to pay some extra charges too. So, keep this thing in mind while choosing the tenure and also the repayment method of your gold loan facility.

So, these are some factors that you must be aware of while picking the lender.

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