Gold Loans Surge: Are You Paying 24% Interest?

Gold loan NBFCs are booming because more Indians are pledging jewellery for quick cash. But gold loans can charge up to 24% interest per year. Before you pledge your mangalsutra, here's what every borrower must know.

Here's what happened: Major gold loan NBFCs are reporting strong profit growth, signalling a surge in Indian households pledging gold jewellery for short-term cash needs.. Net interest income — the spread between what lenders earn and what they pay — is rising sharply, reflecting higher loan volumes and sustained interest rates charged to borrowers.. Gold loan demand is driven by rising gold prices (increasing collateral value) and middle-class households needing quick liquidity without selling assets..

What you should do: Compare gold loan rates across your bank and at least two NBFCs — banks typically charge 12–15% vs 18–24% at NBFCs, potentially saving you thousands annually.. Check the LTV (loan-to-value) ratio offered — RBI mandates a maximum of 75% of gold's value; if any lender quotes higher, walk away immediately.. Set a repayment calendar reminder before taking a gold loan — missed payments trigger auction notices fast, and you could lose jewellery with sentimental or high monetary value..

Opt for a gold loan with monthly interest payments rather than bullet repayment — it costs less overall and keeps your loan account 'standard', protecting your CIBIL score.