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Things You should Consider before Applying for a Gold Loan


A gold loan simply refers to a loan borrowed against your gold. In this type of loan, you are required to pledge your gold as a security against the loan borrowed. It is a secured type of loan given by lenders once they’ve received an article of gold as collateral. This gold article can be any gold jewelry, coin, or ornament belonging to you. A gold loan is the fastest method of getting money in need. You will receive an amount proportional to the gold’s value, irrespective of your CIBIL score.

Five things to keep in mind before you apply for a gold loan

The unprecedented COVID-19 crisis has resulted in heavy financial losses for every other person. It has caused people to take extreme measures such as exhausting their lifetime savings and taking loans to meet unexpected personal exigencies. At such times, if you have gold in your bank locker or your home, you must make an application for availing of a gold loan instead of a personal loan. The reason being that since it is a secured type of loan against a tangible asset, the interest rate offered is lower as compared to a personal loan.

But before you proceed to make an application, here are the five things you must keep in mind.

  • Tenure: Unlike other types of loans, their repayment tenure in a gold loan consists of a shorter duration.  Most lenders offer up to 1 year. You must therefore be prepared to repay the loan amount within the specified time. In case of failure to repay within the specified period, lenders will have the right to sell your gold.
  • Pick a trustworthy creditor, look at interest rates:  The interest rates of gold loans differ from every lending institution. You must compare the interest rates of different lenders and select the one suitable for you. You must pick a trustworthy lender whose terms and conditions seem reliable and favorable to you. You must be cautious of getting a gold loan from small jewelry shops as they are susceptible to fraud.
  • Loan Amount: Your loan amount shall be sanctioned as per the value of your gold and your lender’s policy. You will only receive a certain percentage of the gold value.
  • Repayment: It is crucial to look at the repayment options before applying for a gold loan. Here are a few repayment options you need to know about:
  • Bullet Method: In this method, your loan amount shall be calculated ordinarily in the matter as per usual standards except that you can pay the entire loan amount along with interest at the end of repayment tenure when it is due.
  • Upfront Interest: In this method, you can pay interest at the beginning of your tenure.
  • EMI: You can repay the loan amount along with interest regularly, in monthly installments under the EMI method.
  • Processing Fee: You must check the processing fee charged by each lender as it differs from every lending institution.

Additional Read: Why Gold is the Perfect Investment for You This Diwali


The gold loan application in India is simple, hassle-free, and requires minimal documentation such as submitting your KYC. The application for a gold loan requires minimum eligibility criteria. Thus, even with a low CIBIL score, you can receive a loan against your gold. Once you have repaid the loan amount, you can get your gold back.

Additional Read: When is the Good Time to Invest in Gold Mutual Fund


ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Mumbai - 400025, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730) and BSE Ltd (Member Code :103) and having SEBI registration no. INZ000183631. Investment in securities market are subject to market risks, read all the related documents carefully before investing. We are distributors of loan products, Insurance and Mutual funds, Corporate Fixed Deposits, NCDs, PMS and AIF products. ICICI Securities Ltd. acts as a referral agent to various banks for various loan facilities and is subject to fulfilment of eligibility criteria, terms and conditions etc. All disputes with respect to the distribution / referral activity would not have access to Exchange investor redressal or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.


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