Gold Loan Boom: 5 Traps Costing You Extra?

Gold loans are booming in India as gold prices rise and banks tighten personal loans. NBFCs are lending more against gold jewellery. Before you pledge your family's gold, know the real costs and risks involved.

Here's what happened: Gold loan portfolios at NBFCs have crossed double-digit share of total lending as elevated gold prices increase the collateral value of jewellery borrowers can pledge.. Tighter RBI norms on unsecured personal loans have pushed lenders to prefer secured gold loans, making approval faster and easier than unsecured credit for many borrowers.. Rising gold prices — with 24K gold trading above ₹9,000 per gram in 2025 — mean borrowers can access significantly larger loan amounts against the same quantity of jewellery than two years ago..

What you should do: Compare per-gram valuation offered by at least 3 lenders (your bank, an NBFC, and a cooperative bank) before pledging gold — valuations can vary by ₹500-₹800 per gram.. Check the actual annualised interest rate (APR), not just the monthly rate — a '2% per month' pitch equals 24% per year, which beats personal loan rates only rarely.. Ask for the auction policy in writing before signing: find out how many days after default the lender can initiate sale, and what notice they must give you..

Request a bullet repayment gold loan (interest-only monthly, principal at end) — it cuts your monthly outgo by up to 60% versus EMI-based gold loans for the same amount.