Gold Loan Processing Fees: What You Need to Know Before Applying

by aleiday rjanssenMay 18, 2023
gold loan processing fee

Gold has always been integral to Indian culture and is considered a valuable investment. It is not just purchased for festivals but also for special occasions like weddings and the birth of a child. Due to its long-term value retention and appeal, every household in India is expected to have a stock of gold they can rely on in times of need. A gold loan is an amount a borrower can receive against the pledged gold. The gold loan per gram amount is calculated based on the purity and weight of the gold, with a higher gold loan per gram for higher-purity gold. 

Table Of Contents

Benefits Of Gold Loan

  • Taking a gold loan requires minimal documentation and a low gold loan processing fee compared to other types of loans.
  • Gold loan per gram typically offers lower interest rates than unsecured loans, such as personal loans.
  • Unlike other types of loans, your credit history, employment history, age, and other factors may not be considered when applying for a gold loan per gram.
  • You are not required to provide proof of income or credit history when applying for a gold loan per gram.
  • Gold loans usually offer flexible repayment options and come with a very low gold loan processing fee.

Different Repayment Options On Gold Loans

  • Equated Monthly Instalments are a loan repayment option where the borrower has to pay a fixed amount to the lender every month, consisting of a portion of the principal loan amount and the interest charged. 
  • Lump-sum payment of the interest component upfront, known as Bullet payments. This amount will be repaid along with the loan amount at the end of the loan tenure.
  • Payment of the interest component first as EMI during the loan tenure, and the principal component of the loan is paid later at the end of the tenure. This option is currently only offered only by NBFC. 

Borrowers should carefully evaluate their financial requirements and choose a repayment option that suits their needs and capacity.

Sources For Obtaining A Gold Loan

Regarding obtaining a gold loan, various options are available in the market. While small-time jewellers or pawn shops may offer gold loans, it is recommended to approach a reputable bank or NBFC regulated by the Government of India. Such lenders adhere to regulatory guidelines, ensuring your gold is safe. Some NBFCs specialise in offering gold loans per gram, offering borrowers more attractive interest rates and other benefits such as flexible repayment options, lower gold loan processing fee, and doorstep services. However, it is important to compare the interest rates and features of various banks or NBFCs before deciding where to obtain a gold loan. 

Eligibility Criteria Of Gold Loan

When obtaining a gold loan, the purity of the gold loan per gram plays a crucial role. Generally, the higher the purity of the gold, the higher the valuation amount, which results in a higher loan amount. Most lenders expect a minimum purity level of 22-karat or more for considering it as collateral to pledge against the loan. It is important to note that the value of any precious stones or gems set into the piece will not be considered for a gold loan. The value of the gold loan per gram will solely determine the loan amount. It is worth noting that gold coins are more likely to be accepted as collateral for a gold loan compared to gold jewellery. 

Important Points To Keep In Mind Before Taking A Gold Loan

  • The repayment tenure of a gold loan per gram can vary from 7 days to 12 months, depending on the lender.
  • Lenders offer gold insurance to protect the borrower in the event of theft or other unforeseeable circumstances.
  • Some lenders may charge a nominal gold loan processing fee of up to 1% of the gold value or loan amount.
  • A valuation charge may also apply, but some lenders waive this fee if they have an in-house evaluator.
  • The interest rate on a gold loan varies from lender to lender and can range from 9.50% to 28% per annum.
  • Applicants over 21 are eligible to apply for a gold loan.
  • Only know your customer (KYC) documents are required for the loan application process.


Gold loan processing fees are essential to consider when applying for a loan. Borrowers need to know the different processing fees and other associated costs offered by various lenders before selecting a gold loan agreement. Lenders charge a gold loan processing fee to process a gold loan application. The fee may vary from lender to lender and is typically a percentage of the loan amount or the value of the gold pledged. Some lenders may waive the processing fee or offer lower rates to attract more borrowers. The lender determines the gold loan per gram based on the prevailing market conditions and the value of the gold. It is recommended to conduct research and make comparisons of the gold loan per gram and gold loan processing fee provided by various lenders before committing to a loan agreement.

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