A gold loan lets you borrow against gold jewellery or coins. Because the gold secures the loan, approval depends on the gold rather than your income or credit score — which is why gold loans are among the fastest loans available, often disbursed the same day.
How much will you get?
The lender tests your gold's purity and weight, values it, and lends a percentage of that value — the loan-to-value (LTV) ratio. Under RBI's directions on lending against gold and silver collateral, effective 1 April 2026, the maximum LTV is tiered:
| Loan amount | Maximum LTV |
|---|---|
| Up to ₹2.5 lakh | 85% |
| ₹2.5 lakh to ₹5 lakh | 80% |
| Above ₹5 lakh | 75% |
The LTV must be maintained through the loan, including any interest that is due at the end of a bullet loan.
Repayment options
- EMI — principal and interest every month, like any term loan.
- Interest-only — pay interest monthly and principal at the end.
- Bullet repayment — pay principal and interest together at maturity. RBI limits bullet-repayment gold loans to a tenure of 12 months.
- Overdraft — draw as needed up to a limit.
Your protections
RBI's directions require lenders to follow a transparent, standardised process for valuing gold, to explain the terms clearly in a language you understand, and to return your pledged gold promptly once you repay — with compensation payable to you if they delay. If a loan goes into default, the lender must give you notice before any auction and follow a transparent auction process.
Checklist before you pledge
- Ask for the per-gram rate and purity reading — and watch the testing.
- Confirm how interest is charged (monthly, quarterly, or at maturity) and any penal charges.
- Keep the pledge receipt safe; you'll need it to collect your gold.
- Diarise the maturity date. Renew or repay in time to avoid auction risk.
Kredistar helps you compare gold loan offers from banks and NBFCs on our panel. Explore gold loans.
This article is for general information only and is not financial, legal or tax advice. Loan terms are set by the lender. Kredistar Finserv Pvt. Ltd. is a DSA and loan aggregator, not a lender.