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‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.
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Rahul, a 28-year-old young professional, lives with his family in Mumbai. He has a stable job, but sometimes, he faces financial emergencies beyond his savings. In 2025, his elder brother is getting married, and his family wants him to contribute ₹5 lakh. Rahul doesn’t have that much saved or want to sell the gold jewellery his dadi gave him.
Now, Rahul realises that a gold loan can be a good option. He takes a loan of ₹5 lakh by keeping his 100 grams of gold jewellery as collateral. The bank offered him a 12% interest rate, and he had to pay ₹44,424 as an EMI.
A gold loan is a secured loan in which you keep gold jewellery, coins, or bars as collateral to take a loan. This loan is perfect for the short term. This process is fast and requires minimal documentation. Gold loan demands will increase rapidly in 2025 because people prefer loans over selling gold.
Gold loan interest rates range between 9% to 24% in 2025, depending on the lender, loan amount, and repayment tenure. Let’s have a look at a few examples:
Loan Amount (₹) | Gold Pledged (grams) | Interest Rate (%) | Tenure (Months) | EMI (₹) | Total Interest (₹) |
₹1 lakh | 20 | 12% | 6 | ₹17,320 | ₹3,920 |
₹2.5 lakh | 50 | 14% | 12 | ₹22,488 | ₹18,856 |
₹5 lakh | 100 | 15% | 24 | ₹24,243 | ₹81,832 |
₹10 lakh | 200 | 18% | 36 | ₹36,152 | ₹3,01,472 |
(Note: EMI Calculations are approximate and vary depending on the lender’s terms.)
Gold loan interest rates seem very simple, but much is behind it. These rates depend not on one factor but on the combination of market conditions, loan tenure, and customer profile. Let’s understand these factors in detail:
Read More – How to Calculate Interest Rate on Loan – Step-by-Step Formula Guide
Gold is a global commodity whose value fluctuates with the market’s demand and supply. When gold prices are high, banks and NBFCs feel more comfortable offering gold loans because gold is considered a safe collateral.
Period | Average Gold Price Range (per gram) | Observations |
Post-Diwali (Late Oct/Nov) | ₹7,455 - ₹8,133 | High demand from the festive season keeps prices elevated. |
Early January (1st Week) |
Credit score does not have such a big role in gold loans. However, if you have a strong past financial history or are an existing bank customer, banks may offer you lower interest rates.
Gold loans are available for the long term as well as for the short term. Generally, shorter tenures have slightly lower interest rates because lenders face less risk.
Every bank or NBFC has its own method for calculating interest rates. Some banks offer lower interest rates on gold loans but may have higher processing fees or hidden charges. That’s why it is essential to understand the total cost of the loan before borrowing.
Gold loan interest rates are not just a number; they directly impact the total cost of your loan. That’s why it’s essential to understand these factors before taking a loan:
It is essential to understand which one to choose—fixed or floating interest rates. This decision can impact your loan cost.
In a fixed interest rate, the interest rate remains the same throughout the loan tenure. This means your EMI or repayment amount will not change.
Advantages:
Example:
A floating interest rate can change based on market conditions and RBI policies. Initially, this rate may be lower than a fixed rate, but if market rates rise, your EMI or total cost could also increase.
Advantages:
Risks:
Example:
Your choice depends on how much risk you are comfortable with and what you expect from the market. If you want steady, predictable payments - choose a fixed rate. But if you’re okay with the possibility of your rate going up in exchange for a lower starting rate, a floating rate might work better for you.
Interest Rate Type | Interest Rate | Monthly EMI (approx.) | Total Payment (12 months) | Total Interest |
Fixed Rate | 12% p.a. |
(Note: If the floating rate remains at 10% throughout the tenure, the overall cost would be lower than the fixed rate scenario.)
Not all banks and NBFCs accept every type of gold. Generally, 22-carat and 24-carat gold jewellery are accepted. Coins and bars are also accepted, but their purity is checked.
Gold Type | Accepted? |
22-Carat-Jewellery | YES |
24-Carat-Jewellery | YES |
Gold Coins |
Consider these essential points before taking any gold loan:
Gold loan repayments are flexible; the State Bank of India (SBI) has given these options:
Repayment Type | Tenure (Months) | Interest Rate (%) | EMI/Bullet Amount |
EMI-Based | 12 | 12% | ₹44,424 |
Example | Loan Amount | Gold Pledged | Interest Rate | Tenure | EMI | Total Interest |
140 grams
15%
24 months
₹33,940
₹1,14,560
Bullet repayment is a plan where you do not have to pay any EMI or monthly payment during the loan tenure. At the end of the loan tenure, you must pay the principal amount and the entire interest in one go. According to the HDFC Bank website:
Also Read - Why More Indians Are Choosing Gold Loans Over Fixed Deposits in 2025
“In a bullet repayment plan, you must pay the principal and interest together at the end of the loan tenure. You don’t have to worry about any repayments throughout the loan tenure. Interest is calculated every month, but the payment is made only when the loan tenure ends.”
Prices dip slightly due to lower demand and market correction. |
Late January to February | ₹7,150 - ₹8,449 | Prices rise again during peak wedding season due to increased buying. |
₹17,752
₹2,13,024 |
₹13,024 |
Floating Rate | Initially 10%, then 12% | ₹17,769 | ₹2,13,228 | ₹13,228 |
Gold Bars | YES |
Antique Jewellery | NO |
Bullet Repayment | 3 | 12% | ₹5,15,000 |
Bullet Repayment | 6 | 12% | ₹5,30,000 |
Bullet Repayment | 12 | 12% | ₹5,60,000 |
1 |
₹2,00,000 |
40 grams |
12% |
6 months |
₹34,641 |
₹7,846 |
2 | ₹3,00,000 | 60 grams | 14% | 12 months | ₹26,986 | ₹23,832 |
3 | ₹7,00,000 |
*T&C Apply
Example:
Suppose Rahul takes a loan of ₹5 lakh with an interest rate of 12% and a 6-month tenure. According to bullet repayment:
Rahul has to pay ₹5.3 lakh at the end of 6 months. He does not have to worry about the monthly EMI in this.
Feature | Bullet Repayment | EMI-Based Repayment |
Monthly Payment | No EMI | Fixed EMI |
Total Interest Paid | Slightly Higher | Lower |
Flexibility | High | Moderate |
Best For | Short-Term Needs | Long-Term Planning |
Loan Amount (₹) | Interest Rate (%) | Tenure (Months) | Total Interest (₹) | Total Repayment (₹) |
1 lakh | 12% | 3 | 3,000 | 1,03,000 |
2.5 lakh | 14% | 6 | 17,500 | 2,67,500 |
5 lakh | 15% | 12 | 75,000 | 5,75,000 |
10 lakh | 18% | 24 | 3,60,000 | 13,60,000 |
Bank/NBFC | Gold Loan Interest Rate | Processing Fee |
Kotak Mahindra Bank | 0.88% fixed per month | Upto 2% + GST |
Central Bank of India | 8.40% to 9.50% | 0.50% of the loan amount |
UCO Bank | 8.50% | ₹250 to ₹5,000 max |
8.80% to 9.00% | 0.56% of the sanctioned limit | |
Federal Bank | 8.99% onwards | - |
Canara Bank | 9.00% | ₹500 to ₹5,000 |
SBI | 9.00% onwards | 0.50% + GST |
Bank of Baroda | 9.15% | Applicable charges + GST |
ICICI Bank | 9.25% to 18% | 2% of the loan amount |
Bank of Maharashtra | 9.30% | ₹500 to ₹2,000 + GST |
HDFC Bank | 9.30% to 17.86% | 1% of disbursed amount |
Punjab & Sind Bank | 9.35% | ₹500 to ₹10,000 max |
South Indian Bank | 9.40% to 22% | - |
City Union Bank | 9.50% | Nil |
AU Small Finance | 9.50% to 24% | 1% + GST |
Union Bank | 9.95% | - |
Karnataka Bank | 10% to 10.45% | - |
Indusind Bank | 10.35% to 17.05% | 1% of the loan amount |
Bandhan Bank | 10.50% to 19.45% | 1% + GST |
Karur Vysya Bank | 10.65% | 0.50% (Includes Appraisal Charges) |
J & K Bank | 11.35% | ₹300 + GST |
Punjab National Bank | 12.25% | 0.75% of the loan amount |
Axis Bank | 17% | 0.5% + GST |
Muthoot Finance | 22% p.a. With a 2% rebate if 100% interest is paid monthly | - |
Gold loans have become a popular financial tool in 2025. Due to fast processing, low interest rates, and flexible repayment options, people prefer it. Like Rahul, you can achieve your financial dreams with planning and calculation.
Q. Which gold is accepted in the gold loan?
Generally, 22-carat or 24-carat gold jewellery is accepted. Gold coins and bars are also accepted, but their purity is checked. Antique jewellery or low-purity gold is not accepted.
Q. What is the interest rate of a gold loan?
Gold loan interest rates range between 9% and 24% in 2025. This depends on the loan amount, gold value, and repayment tenure.
Q. How fast is Gold Loan processing?
Gold loans are approved quickly! If your documents and gold valuation are in order, the loan can be approved on the same day or within 1-2 hours.
Q. Is a credit score required for the gold loan?
No, a credit score is not required for a gold loan. This loan is based on gold, so your credit history does not matter.
Q. What are the options for repayment of the Gold Loan?
You can choose EMI-based repayment or bullet repayment. In EMI, you have to pay a fixed amount every month. Bullet repayment allows you to pay at the end of the loan tenure.
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