Gold Loan vs Personal Loan: Which Costs You Less?

Gold loans are one of India's fastest, cheapest ways to borrow short-term cash. If you own gold jewellery, you could get funds in 30 minutes at lower interest than a personal loan. Here's what you need to know before pledging your gold.

Here's what happened: Gold loans have surged in India as a preferred short-term borrowing tool, with NBFCs and banks aggressively growing their gold loan books.. RBI-regulated lenders can offer up to 75% of the gold's current market value as a loan, making it one of the highest loan-to-value secured products available.. Rising gold prices mean borrowers can unlock significantly more cash per gram today than they could two or three years ago — making gold loans increasingly attractive..

What you should do: Compare gold loan interest rates across banks (SBI, HDFC, Canara) and NBFCs — rates vary from 9% to 26% so shop before you pledge.. Check your gold's purity before visiting a lender — hallmarked 22-karat gold fetches the highest valuation and maximises your loan amount.. Avoid rolling over a gold loan beyond 12 months — interest compounds fast; use it only for short-term needs you can repay within the year..

Opt for a gold loan with monthly interest payment (not bullet repayment) — you pay only interest each month and return the principal at the end, keeping EMIs very low.