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The majority of homes in India have unused gold items in their safes. The good news is that you can use them successfully at those crucial times. If you find yourself in a situation where you require cash right away, you can use your gold possessions to meet your needs. Not by selling your gold, but by giving it to a lending company as security. Many banks and NBFCs in India offer their customers gold loans at competitive interest rates. Before applying, you should understand the requirements, advantages, and disadvantages of a gold loan in Delhi. The post goes into greater detail about these subjects.

What is the procedure to apply for a gold loan?

Lenders have different procedures for applying for gold loans in Delhi. The simple idea behind a gold loan in Delhi is that you pledge your gold possessions in exchange for the loan amount. You visit a lending institution armed with the gold loan per gram you wish to pledge and the required documentation. Before determining the gold’s market value, the lender determines its weight and checks the purity of the metal. Gold loans may be approved for up to 80% of the estimated value of the gold pledged. After the assessed gold loan rate per gram has been established, the documents are verified. And after deciding that everything is good and promising, your lender approves your loan.

Nowadays, a gold loan application can also be submitted online through the official website or mobile app of the bank or NBFC. If you apply for a gold loan online, you must still go see your lender. To use the online gold loan facility, you must at least once visit your lender to make a deposit of your gold items and also get to know the gold loan rate per gram. You can then register for the lender’s customer portal or mobile application and connect your bank account after completing this. This means that in the future, whenever you need money fast, you can apply for a gold loan and have the available credit disbursed in your bank account quickly, wherever you are.

As an alternative, you could apply for a gold loan using Paisabazaar.com. You can check your eligibility for a gold loan on this online platform, contrast the gold loan programs provided by different banks and NBFCs, and get loan approvals quickly.

What steps are involved in the gold loan process for banks and NBFCs?

The following steps must be taken by lenders before they can grant a gold loan:

Following the submission of your loan application, whether offline or online, the lender will pick up the gold from you. The gold items that you wish to pledge must be delivered to the appropriate party. If you apply offline, you must deliver the gold to the lender; if you apply online, lenders will deliver the items to your door.

Gold appraisal: In accordance with market rates, the lender determines the total value of your gold (excluding any stones or beads in the ornament). The value of the gold is the only factor used to determine the loan’s amount. It could be between 75% and 85% of the total gold value.

Documentation requirements – You must submit a few documents in addition to your application form. Because only a few documents are needed, such as passport-sized photos, identity proof, and address proof, this is hassle-free. 

Document authentication and loan disbursement – The lender checks the paperwork you’ve submitted. Once it has been approved, the loan amount will be transferred to your bank account.

What advantages does a gold loan provide?

  • Faster processing – Since gold loans are secured loans, there are fewer eligibility requirements and less paperwork needed. Loans can be approved even without a credit score. As a result, lenders frequently complete the loan disbursement process quickly. Those who meet the requirements for an online gold loan can even get their money right away.
  • Lower interest rate – Gold loans have lower interest rates because they are secured loans rather than unsecured loans like personal loans. A gold loan’s interest rate can be further reduced if you pledge another asset as collateral.
  • No processing fees: A lot of banks and NBFCs don’t charge anything to handle gold loans. If lenders do this, their processing fees are typically 1%.
  • No foreclosure fees – While some banks do impose a 1% pre-payment penalty, some lenders do not impose any pre-payment fees at all.
  • Income verification is not necessary – Because gold is the security for gold loans, creditors rarely request proof of income. Therefore, regardless of income, anyone can apply for a gold loan.
  • Your credit score is not required – In contrast to most loans, getting a gold loan is not contingent on your credit score. In contrast to other loans, where the loan amount is decided based on the borrower’s credit history and ability to repay, gold loans are decided based on the market value of the metal.

What negative aspects of the gold loan exist?

  • Lower Loan-to-Value Ratio – Loans secured by gold have a lower LVR. A maximum of 90% of the gold’s value may be borrowed. This is the best-case scenario if you are a valued customer of the bank; otherwise, it might only be 65% or 85%.

If you are unable to pay back the loan amount plus interest within the specified term, lenders are legally permitted to freeze and sell your pledged gold. After paying off the remaining balance of the gold loan, you get your extra cash.

Things to remember before you take a loan against gold:

1. Gold loans can help you get out of a short-term financial bind because the loan term ranges from 12 to 36 months.

2. Look over the different loan terms and select the one that best suits your requirements.

3. Decide on a lender that offers flexible repayment terms, online application, and payment for gold loans.

4. Research the processing fees, prepayment fees (if any), and late payment fees before selecting a lender.

5. Use a gold loan calculator to determine your monthly payment to pay off your EMIs.


A report claims that up until July 2021, the number of gold loans increased 77% year over year, proving the yellow metal’s value in trying times. Your needs will determine whether you can get a gold loan. Do your research and only borrow funds that you can afford to repay.

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