Core Insights - Gold loans are emerging as a preferred emergency credit option in India due to their quick disbursal, lenient terms, and relatively low interest rates compared to personal loans and credit cards [3][21] - The outstanding gold loans have surged 122% year-on-year, reaching Rs 2.94 lakh crore by September 2025, indicating a significant growth in this sector [4][21] - Gold loan interest rates in India range from 8.75% to 22% per annum, which is considerably lower than personal loans (10-25%) and credit cards (36-40%) [5][21] Growth and Market Dynamics - The rise in gold prices over the past few years has enhanced the borrowing potential for individuals using gold as collateral [2][21] - Gold loans are processed quickly, often within hours, making them a viable option for urgent financial needs compared to personal loans that can take 2-7 days [10][22] - The market for gold loans is expanding as borrowers increasingly recognize the cost savings associated with secured loans compared to unsecured credit options [8][21] Borrower Profile and Loan Features - Gold loans are accessible to a wide range of borrowers, including those with poor credit histories, as the gold itself serves as collateral [11][22] - These loans are particularly suitable for short-term liquidity needs, with tenures ranging from 3 to 36 months, and can be used for various expenses such as weddings or minor renovations [13][22] - The documentation process for gold loans is minimal, typically requiring only identity proof and ownership proof of the gold, making it easier for borrowers to access funds [14][22] Cost Considerations and Fees - While gold loans offer lower interest rates, borrowers should be aware of additional costs such as processing fees (up to 5% of the loan) and late payment charges that can increase the overall cost of borrowing [15][22] - The Loan-to-Value (LTV) ratio for gold loans is capped at 75% by the RBI for loans above Rs 5 lakh, but new customers may receive only 60-65% from lenders [17][22] - Understanding the type of interest rate (fixed vs. floating) is crucial for borrowers, as floating rates may change with market conditions [18][22] Current Market Rates - Current gold loan interest rates from major banks include: - State Bank of India: 8.75% p.a. onwards - Bank of Maharashtra: 8.75% p.a. onwards - HDFC Bank: 9.30% p.a. - 17.86% p.a. - Punjab National Bank: Contact the Bank for rates [19][22]

Core Insights - Gold loans provide a convenient solution for various financial needs, including education, business expansion, personal or medical costs, and home renovations, with minimal paperwork and quick access to cash [2][11] How Gold Loans Work - Gold loans involve pledging gold jewelry in exchange for funds, with the loan amount determined by the purity and weight of the jewelry [3][11] - Interest rates on gold loans vary based on the lender, borrower's profile, loan amount, tenure, and repayment option [3][11] Interest Rates - As of October 2025, interest rates for gold loans from various banks and financial institutions are as follows: - State Bank of India: 10.00% - Union Bank of India: 9.65% - Punjab National Bank: 8.35% - HDFC Bank: 9.30% - Muthoot Finance: 22.00% [4] Eligible Items for Pledge - Only specific gold items are accepted for loans, typically gold ornaments with a purity between 18 and 22 karats, and bank-minted coins of 24 karats weighing up to 50 grams [6][11] - Items such as hair pins, cufflinks, gold watches, and imitation jewelry are generally not accepted [6][11] Loan Amount Determination - The loan amount is based on the purity of gold (measured in karats) and net weight, with loans not offered against primary gold like 24-carat bars [9][11] Repayment Options - Various repayment options are available, including: - Paying interest as EMI and principal later - Making partial payments - Bullet repayment - Regular EMI option - Partial prepayment - Prepaying interest upfront [10][11] Market Considerations - Borrowers are advised to check the current market value of their gold and consider lenders offering low interest rates and flexible repayment options [9][11]

Core Insights - A gold loan is a financial product where individuals can borrow money against their gold jewelry, with the amount determined by the purity and weight of the gold [1][5] Interest Rates - As of October 2025, interest rates for gold loans vary across different banks and financial institutions in India, with public sector banks offering rates from 8.35% to 10.50%, while private sector banks range from 9.00% to 10.50% [1] Acceptable Gold Items - Only gold ornaments with a purity of 18 to 22 karats and bank-minted coins (24 karats) up to 50 grams per customer are acceptable for gold loans [2][5] - Items such as gold-plated jewelry, imitation jewelry, and gold bars are not accepted by reputable lenders [4][5] Loan Amount Determination - The loan amount is based on the purity of gold (measured in karats) and net weight, with loans not offered against primary gold (24-carat gold bars and biscuits) [5][4] Repayment Options - Various repayment options are available, including EMI-based repayment, bullet repayment for 3, 6, and 12 months, and an overdraft facility [6]