Gold Loan in India: LTV, Interest, Risks & How It Works

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Last verified: June 2026, against RBI norms and standard lending practice. Rates, LTV and terms vary by lender and change — confirm current terms before borrowing. General information, not financial advice.

A gold loan lets you borrow against your gold jewellery or coins — fast, with minimal paperwork and no income proof. It’s one of the quickest ways to raise short-term cash, but the gold is at stake if you default.

How a gold loan works

You pledge gold with a lender; they value it and lend a percentage of its worth. You pay interest (and principal) and get the gold back on full repayment. Because it’s secured, approval is fast and a credit score/income proof is usually not required.

How much you can borrow (LTV)

The RBI caps the loan-to-value at 75% of the gold’s value — so on ₹1 lakh of gold you can borrow up to ₹75,000. Only the gold content counts (not gemstones/making charges).

Interest and tenure

Rates typically range roughly 9%–18% a year depending on lender and LTV; tenures are short (a few months to a few years). Repayment options vary: regular EMIs, interest-only with bullet principal at end, or full bullet repayment.

Pros and cons

• Pros: fast disbursal, minimal documents, no income proof, lower rate than an unsecured loan.
• Cons: your gold is pledged and can be auctioned if you default; short tenure; over-borrowing risk.

Use it wisely

Gold loans suit genuine short-term needs you can repay soon. Borrow only from RBI-regulated banks/NBFCs (avoid informal lenders), check the purity valuation and all charges, and never borrow more than you can comfortably repay. Compare with an unsecured option in gold loan vs personal loan.

FAQs

How much can I borrow against gold?

Up to 75% of the gold’s value (RBI LTV cap).

Do I need a credit score for a gold loan?

Usually not — it’s secured by gold, so income proof and credit score are generally not required.

What happens if I don’t repay?

The lender can auction your pledged gold to recover the dues, so repay on time.