Gold Loan

Gold loans: how they work

A gold loan is a secured loan against gold jewellery or ornaments. The lender – a bank or gold-loan NBFC – weighs and tests your gold at its branch, lends a percentage of its value within the loan-to-value (LTV) limits set by the Reserve Bank of India, and keeps the gold in its custody until you repay. Because the loan is fully secured, it is usually quick to process and income proof may not be required.

Early Grow does not hold or value gold. We help you compare gold loan offers from partner lenders and choose the right repayment option. The valuation, safekeeping and disbursal are done by the lender.

Repayment options lenders commonly offer

• Regular EMI – principal and interest paid monthly.
• Interest-only – you pay interest periodically and repay the principal at the end.
• Bullet repayment – you repay principal and interest together at maturity, within the lender’s permitted tenure.
• Overdraft – some lenders offer a limit against gold, and you pay interest on the amount used.

Eligibility and documents

Adult individuals who own the gold, and in some cases businesses for business purposes. Typically you need:

• KYC: PAN, and Aadhaar or other address proof.
• Your gold jewellery or ornaments. Most lenders do not accept gold bars or primary gold, and some limit gold coins.
• A declaration of ownership of the gold.

How Early Grow helps

1. We explain how gold loans are priced and compare offers from partner lenders on rate, LTV, tenure and charges.
2. You visit the chosen lender’s branch with your gold and KYC. The lender weighs and tests the gold and confirms the amount.
3. The lender disburses the loan and gives you a pledge receipt with the gold’s details.
4. When you repay in full, the lender returns your gold.

Before you pledge

• Check the interest rate, processing and valuation charges, and the penal charges for late payment.
• Understand the auction policy. If you don’t repay, the lender can auction the gold after giving notice as required by RBI rules.
• Keep the pledge receipt safe, and check the gold’s description and weight on it.