A gold loan is secured borrowing in which eligible gold jewellery or other permitted gold assets are pledged to a lender as security. The lender evaluates the pledged gold according to its policies and applicable rules.
How a Gold Loan Works
- You submit eligible gold for evaluation.
- The lender assesses the gold according to applicable procedures.
- A loan amount is offered subject to eligibility and lending limits.
- You accept the terms and receive the funds.
- You repay according to the agreed schedule.
- The pledged gold is released after the applicable obligations are settled.
Benefits
- Secured borrowing
- May be useful when quick access to funds is needed
- Can be available to some borrowers who may find unsecured credit difficult
Risks
The biggest risk is failing to repay according to the agreement. Because gold is pledged as security, the lender may have rights over the collateral under the agreement and applicable law if obligations are not met.
What Affects the Loan Amount?
Gold purity, weight, valuation methodology, applicable lending limits and lender policy can affect the amount available.
Check These Before Borrowing
- Interest and total cost
- Valuation method
- Repayment schedule
- Late-payment consequences
- Release procedure for pledged gold
- Terms relating to default and sale of collateral
FAQ
Is a gold loan unsecured?
No. It is secured by the pledged gold.
What happens if I cannot repay?
Consequences depend on the agreement and applicable law and can include action against the pledged collateral.
Disclaimer: Gold-loan rules and product terms can change. Read the lender’s current agreement and applicable regulatory requirements before borrowing.