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June 14, 2026
The Dispatch

Definition

Gold Loan

A gold loan is a secured loan where you pledge gold jewellery or coins as collateral to borrow money quickly.

A gold loan lets you borrow against gold ornaments or coins, which the lender holds securely until you repay. Because it is secured, it offers fast disbursal, minimal documentation, and lower interest rates than unsecured loans, and your credit score matters less.

The loan amount is a percentage of the gold's value (the LTV), which the RBI caps to protect against price falls. Repayment options are flexible — regular EMIs, interest-only with bullet principal repayment, or paying everything at maturity.

The key risk is that defaulting can lead to the lender auctioning your gold. Gold loans suit short-term needs where you have idle gold and want quick, affordable funds, with a clear plan to redeem the pledge.

Related terms

  • Loan-to-Value (LTV) RatioLTV is the proportion of an asset's value that a lender is willing to finance through a loan.
  • Secured vs Unsecured LoanA secured loan is backed by collateral the lender can seize on default; an unsecured loan has no collateral and relies on your creditworthiness.
  • Loan Against Property (LAP)A loan against property is a secured loan where you mortgage residential or commercial property to raise funds for any purpose.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.