Gold loans are secured loans made against the gold jewellery you pledge. The loan amount is determined by the purity of the gold and its market price on that particular day. Gold loans are immediate; the banker examines your gold and deposits the funds into your account. You are not required to offer any additional security or collateral because the gold serves as collateral. Gold loans are not based on your income, age, or credit score; just the gold matters. As a result, your credit score is not taken into account when your loan is processed.

However, your payment history is recorded with the credit bureaus, and any missed or late payments will appear on your credit history. This can affect your ability to get future credit cards and loans.

When it comes to loans and credit cards, your credit score is quite essential. A high credit score ensures a large loan amount and low interest rates. You must check your credit score on a regular basis and take all required efforts to keep it at a good level.

Additional Read: Beginners Guide To Gold Loans

Gold Loans Are A Great Way To Improve Your Credit Score

Gold loans are a good credit score enhancer because the loan is secured by your gold. The loan amount is determined by the market price of the gold, which is a stable and verifiable financial instrument. Though a bad repayment history can adversely affect your credit score, if you maintain your gold loan properly, you can improve your credit score. 

An Instant Loan can also be a good option if you are in a financial crunch 

Make your repayments on time - When you make your EMI payments on time, this will be recorded against your credit history. This is a simple way to improve your credit score. 

Late payments or missed EMIs can result in auction of your gold. While some lenders may be generous and not penalize you for one or two late EMI payments, this can harm your credit score and have a negative impact on your gold. Stretch your budget, but avoid skipping payments at all costs.

Borrowers seek Gold Loans as they are easier to obtain. But you need to keep in mind that you will be putting your valuable assets at danger for the term of the loan. In an emergency, this may be necessary, but it may be less than optimal in the long run. Look for strategies to improve your credit score and, if possible, switch to an unsecured loan as soon as possible.

Also Read: 8 Smart Benefits Of Taking A Gold Loan

Gold Loans In India Snapshot

Gold Loan Interest Rates

7% - 13%

Loan Amount

Up to 90% of the gold value (loans of up to Rs.1 crore can be availed with ICICI Bank Gold Loans)

Gold Items that can be pledged

Gold jewellery, bars & coins

Loan Tenure

7 days – 36 months

Processing Fees

0.25% – 2% of the loan value

Repayment Options

EMI payment or Bullet Payment plans


Here Are The Top 5 Cheapest Gold Loans You Can Avail In India

Bank Name

Interest Rate

Loan Amount

Processing Fees


Bank of Maharashtra

Starts at 7.00%

LTV of 75% of gold value (up to Rs.25 lakhs)

Up to Rs.2000

EMI Plan – Max. 24 months

Bullet Plan – Max. 12 months 

Cash Credit – Max. 12 months

State Bank of India

7.00% - 7.50%

LTV of 75% of gold value (up to Rs.50 lakhs)

0.25% of the Loan amount +minimum Rs250/- + applicable GST

SBI Realty EMI Gold Loan: 36 months

SBI Realty Liquid Gold Loan: 36 months

SBI Realty Bullet Repayment Gold Loan : 12 months

Canara Bank Swarna Loan


From Rs.5000 – Rs.35 lakhs

0.50% of the loan amount capped at a maximum of Rs.5000

Bullet Repayment – Max. 12 months

Swarna Overdraft – 2 years

Indian Bank Jewel Loan


LTV of 65% for loan above Rs.5 lakhs

LTV of 70% for loans up to Rs.5 lakhs

0.50% of the loan amount

Bullet Repayment – Max. 12 months

EMI Repayment – Max. of 35 months

Union Bank of India

7.25% - 8.25%

LTV of 75% - Up to Rs.25 lakhs available

As per bank guidelines

Bullet Repayment – Max. of 12 months

Personal Loan VS Gold Loan: Which One Is Better? 

  • Personal loans are preferable if you need a larger borrowing amount.
  • If you need a loan right away, a gold loan is the perfect option for you.
  • Personal loans have a lengthier repayment period, whereas gold loans just need you to pay interest throughout the borrowing time.
  • The final decision is based on your needs. Make a list of your requirements and determine which loan will best meet them.
  • Before you choose one, compare the interest rate, processing costs, payout time, and other considerations. Whatever loan choice you choose, make sure to evaluate your payback and EMI capacities so that your credit score is not harmed in the future.


Remember, a good credit score is vital to get the best loans and credit cards. In times of financial hardships, gold loans can help you tide over the tough times, as the loan amount is guaranteed against gold. But you have to repay the loan on time so that your credit score is not affected. The interest you pay is not linked to your credit score; however, if you fail to repay the loan on time, it will affect your credit score. If you are in financial hardship and can’t make your repayments, you can negotiate with your bank to postpone the repayments.