Gold Loan

What Is The Maximum Tenure For Gold Loan?


Gold loans are a great way to meet your immediate cash demands. Suppose you have gold items you want to use during a financial crisis or fulfil other monetary requirements. In that case, you can easily apply for a gold loan without any problem because you can obtain it in a few minutes to 48 hours. The duration of gold loans varies according to the institution. The tenure of repayment for gold loans starts at a minimum of seven days and a maximum of five years.

Benefits of gold loans

  • Hassle-free documentation: Financial institutions use a relatively easy KYC-based documentation process. The borrower must supply all relevant documentation, such as evidence of identity and address. Income certificates or financial statements are not required in the gold loan application process, as in other loan applications.
  • Reduced Interest Rates: Gold loans are a secured type of borrowing. Hence, lenders charge a lower interest rate when compared to other unsecured advances.
  • No Processing Fee: Banks and publicly traded financial organisations do not charge processing fees because gold loans are granted instantly.
  • No effect of CIBIL ratings: Unlike most loans, gold loans are not based on your financial situation or credit score. The borrower’s repayment limit and previous repayment record determine the advance amount for other unsecured loans. In the event of a gold loan, however, the advance amount is determined by the value of the gold.
  • Safe Gold Storage: The lender is responsible for safely storing the gold jewellery. The gold is secure in their vault, and the borrower does not have to worry about it.
  • Multiple uses: Medical emergency, schooling, business expansion, wedding plans, or the initial instalment for purchasing a vehicle or a property can all be financed using gold loans.

Modes of Gold Repayment

  • EMIs, or Equated Monthly Installments, are the most frequent method of repaying a gold loan. This is best if you have a steady income. Use a gold loan EMI calculator to calculate the amount paid in EMIs. People who select EMIs to repay their gold loans enjoy a consistent monthly income stream. The lender would charge monthly interest on the principal in this arrangement. Still, the principal plus interest would be due after the loan term.
  • To keep track of your expenses, you can use a gold loan repayment calculator to determine how much you would have to pay. With a small exception, the monthly payment procedure of a gold loan is identical to that of an EMI. This technique requires simple monthly payments of the interest accrued on the principal amount. The principal is paid only after the gold loan term. The gold loan repayment calculator can help you determine how much interest you’ll pay each month. This repayment plan is also appropriate for low-income borrowers or those who do not have a monthly cash intake.
  • Bullet repayment is appropriate for short-term gold loans of 6 months to 1 year. However, by the time the loan term is up, you will have paid much more interest with the bullet repayment method. Although expensive, this strategy may be suitable for people who do not have a steady source of income and cannot afford monthly payments.
  • Foreclosure refers to repaying the entire loan amount before the loan term expires. Pre-closure money can also be used to settle gold loans.
  • Making partial principal and interest payments is another traditional method of repaying gold loans. You can save money on your loan by making larger payments at the beginning.

Repayment Tenure for Gold Loans

When compared to most other loans, gold loans have shorter repayment terms. Typically, the maximum payback duration for a gold loan is 24 months for long-term loans serviced in EMIs and six months for short-term loans repaid in a lump sum.

You can repay the loan in 24 instalments if you choose monthly payments. This means that the maximum gold loan term is 24 months. Even if you prefer shorter loan payback terms, such as 12 months, you can repay the loan before the term finishes.

Banks do not charge prepayment penalties if you pay a minimum of three instalments and close the loan before the end of the term.

If you choose a short gold loan term with a one-time payment, you will have a maximum repayment period of 6 months at a set interest rate. When your loan term ends in six months, you can repay the entire amount in one lump sum.

Factors influencing gold loan applications

  • Identity evidence, address proof, and recent passport-sized pictures are the most common types of documentation requested for a gold loan application. While this list remains consistent, many institutions have supplemental document lists for increased security.
  • Because gold loans are evaluated based on the value of gold jewellery, financial institutions have a sanctioning limit. They can only make loans within that range. Greater limits are only permitted in exceptional circumstances where management agrees with the events and the borrower has a favourable repayment record.
  • Financial institutions can grant a credit limit of up to 75% of the market value of the gold mortgaged in the case of a gold loan. The Reserve Bank of India caps the loan-to-value ratio in this scenario. When a borrower has fully repaid their loan, their gold loan eligibility requirement for reclaiming the same gold for future needs is positive. 
  • The most significant advantage of a gold loan is the flexibility to repay the principal and interest in numerous ways. They include a lump sum or equally distributed monthly gold loan payment alternatives, which are not accessible with other loan advances.

Again, each NBFC has its loan gold loan payment options, and applicants must read the terms and circumstances before applying.


Gold loans are great for emergencies, weddings, and personal emergencies since they are convenient and have a faster processing time. However, with fluctuating gold loans, any decline in the gold price may trigger the banks’ decision to sell the jewellery and repay the gold loan instead. However, the borrower might avoid this problem by repaying the bank the appropriate amount.

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