Gold loan guide: who can apply, documents needed and how to apply

In a gold loan, borrowers do not sell their gold but pledge it and borrow money against it. Eligible gold jewellery, ornaments or coins can be pledged. Knowing before applying who can take the loan, which documents are needed and how the process works makes it easier to prepare for the gold assessment and to choose an amount that suits one's needs.

Eligibility depends on the lender's conditions and on the gold being pledged. The basic conditions are these: the applicant must be an Indian citizen aged between 21 and 80. The purity of jewellery or ornaments should generally be between 18K and 22K. Gold coins of up to 24K purity can also be accepted, within the applicable limits. The applicant must also hold gold that can be kept as collateral. Salaried people, the self-employed and pensioners can all apply if they meet the conditions.

Keeping KYC documents ready makes the application and checks smoother. One of the following government-recognised documents must be submitted: Aadhaar card, voter ID card, passport, driving licence, NREGA job card, or a letter issued by the National Population Register. A PAN card must also be provided for a gold loan of Rs. 5 lakh or more from Bajaj Finance. The lender may ask for further documents or information to complete verification.

Before applying, a gold loan eligibility calculator can give an idea of how much can be borrowed against the gold. The estimate generally depends on the gold's purity, net weight, the applicable gold valuation and the lender's conditions. For example, if the assessed value of the eligible gold is Rs. 1 lakh and the applicable maximum LTV limit is 85%, the estimated loan amount would be Rs. 1,00,000 x 85% = Rs. 85,000. This is only an example, not a firm loan offer. The actual amount may differ after the gold is assessed and the applicable limits are applied. Bajaj Finance offers gold loans from Rs. 5,000 to Rs. 2 crore, subject to eligibility, gold valuation and the LTV limit.

The application can be started online on the Bajaj Finance website or app. First, go to the Bajaj Finance gold loan page and select the "APPLY NOW" button. Then enter a 10-digit mobile number and verify it with the OTP received. After that, fill in the personal details asked for in the form. Choose the nearest Bajaj Finance gold loan branch for the gold assessment. Once the details are submitted, an in-principle loan eligibility letter can be downloaded.

At the branch, the purity and the gross and net weight of the gold are checked, and the applicant must be present. Under the Reserve Bank of India's Gold and Silver Collateral Directions, 2025, the reference price used is the lower of the average closing price over the previous 30 days or the previous day's closing price for gold of the same purity. This price must be published by the India Bullion and Jewellers Association (IBJA) or by a commodity exchange regulated by SEBI. Only the value of the gold itself is counted, so stones, gems and other embellishments are not included. Once the assessment and the necessary verification are complete, the lender states the final loan offer. The amount is disbursed after approval and the required formalities.

Before accepting a loan, check the total cost of the borrowing, the charges payable and the repayment schedule. Also make sure the repayment terms suit your financial situation, because timely payment is necessary to get the pledged gold back.