Eligibility Criteria to fulfill While taking a Gold Loan

Eligibility Criteria to fulfill While taking a Gold Loan

Gold has been utilised as collateral in the financial market long before the existence of any loans. Previously, individuals used to pledge their household ornaments or jewellery as mortgages to secure funds to meet their needs. Likewise, pawnshops used to keep valuables, especially gold, as collateral to lend money to those in need. 

Nowadays, financial institutions have also started offering loans. Unlike any other advance, loan eligibility is not very strict, and the documents required are also nominal. Also, the loan processing time is also comparatively much shorter than other secured advances. Following is a look at the eligibility requirements for a loan and other related details that testify to the benefits of this advance.

Eligibility criteria for gold loan

Since a gold loan is a secured loan, there aren’t many restrictions attached to its eligibility factors. Therefore, you can easily avail a loan if you are:

  • A salaried or self-employed individual.
  • Between 21 to 70 years of age.
  • In possession of enough gold assets to avail an advance against their value.

Apart from the above two factors, the loan amount you can avail of depends on the ‘Loan to Value’ (LTV) ratio. The Reserve Bank of India has set the LTV cap at 90% in case of loans. Therefore, the purer quality of gold you keep as collateral, the higher will be the loan amount you can avail.

You also have to keep in mind that financial institutions accept gold as collateral only in jewellery or ornamental forms. Gold bars and coins are not accepted as collateral.

Documents required for gold loan eligibility

After complying with the eligibility factors, you will also need to submit a few documents to avail the advance. Following are the documents that you will need to present:

  • Identity proof: PAN/ Aadhaar/ Voter Card,driving license,passport, etc.
  • Address proof: Ration/voter/Aadhaar Card,passport,bank passbook, etc.

You might also need to present your income proof along with the above documents if the lender requires it.

Thus, availing of a loan requires nominal paperwork and documentation. With just these few gold loan documents, you can secure a loan to back you up at the time of your crisis.

Following is a comparison of gold-loans and personal loans to gain perspective on the benefits of the former advance over the latter.


  • Both loans can be used to meet any expenses.
  • Both of the instrumentsrequire nominal processing time and fee.


  • Gold loans fall under the secured loans category, while personal loans are unsecured.
  • A personal loan does not require pledging any collateral, while it is necessary to mortgage gold ornaments to secure a gold loan.
  • Periodical payment of only interest is possible while availing of a gold-loan, while it is not allowed for personal loans.
  • G loans are usually short-term in nature, while personal loans can be repaid over a considerable tenor.
  • Interest charged at the time of repayment is much less in the case of a loan than a personal loan.
  • You can choose your monthly instalment amount according to your convenience for a gold-loan. Whereas with a personal loan, you have to pay based on your principal amount and interest rate.
  • Gold loan eligibility does not abide by stringent policies and documentation. But securing a personal loan might require borrowers to prove their credibility and maintain a high credit score.

Thus, loans make for a much more viable source of financing, owing to their ease of accessibility. With NBFCs like Bajaj Finserv offering loans against easy-to-meet gold-loan eligibility and nominal documentation, individuals can avail the funds to meet any number of financial requirements. 

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