How gold loan eligibility works
- Gold value = Weight (g) × Purity factor × Rate per gram (24K).
- Max loan = Gold value × LTV% (default 70%, RBI max 75%).
- EMI is calculated on the loan amount using the standard EMI formula.
Purity factors: 24K = 1.0, 22K = 0.916, 18K = 0.75, 14K = 0.583.
Gold loan interest rates (India, 2024)
| Lender type | Rate range | Examples |
|---|---|---|
| Banks | 7%–10% p.a. | SBI, HDFC, ICICI, Canara |
| NBFCs | 10%–15% p.a. | Muthoot, Manappuram, IIFL |
| Cooperative banks | 9%–13% p.a. | Local co-op banks |
FAQ
What happens if gold prices fall after taking the loan?
If gold value drops below the loan outstanding, the lender may ask you to pledge more gold or make a partial repayment to maintain the LTV ratio. In extreme cases, the lender can auction the gold after due notice.
Can I repay the gold loan early?
Yes. Most lenders allow prepayment with minimal or no penalty, especially for short-tenure loans. Check your loan agreement for specific terms.
Is gold loan interest tax deductible?
If the gold loan is used for business purposes, the interest is deductible as a business expense. For personal use, there is no tax benefit on gold loan interest.