From how your loan amount is calculated to how your gold is kept safe — here is what every applicant should know
Pune, Maharashtra, India (NewsVoir)
Gold loans have become one of the most straightforward ways for individuals across India to access funds quickly, without the lengthy paperwork or credit score requirements that come with most other loan types. As more people look to unlock the value sitting in their gold jewellery, ornaments and coins, Bajaj Finance has outlined the key things every applicant should understand before walking into a branch or applying online.
What a gold loan actually is A gold loan is a secured loan where the borrower pledges gold jewellery, ornaments or coins as collateral in exchange for funds. The loan amount is determined by the weight and purity of the gold, the applicable gold rate on the day of assessment, and the Loan-to-Value (LTV) ratio set by the lender. Once the loan is repaid in full, the gold is returned to the borrower.

Unlike personal loans or credit cards, a gold loan offers a low interest rate and easy-to-meet eligibility criteria. This makes it accessible to a wide range of borrowers — salaried individuals, self-employed professionals, and pensioners among them.

Who can apply Bajaj Finance accepts gold loan applications from Indian citizens between the ages of 21 and 80 years. The eligibility criteria are intentionally simple — the focus is on the quality and purity of the gold being pledged, not solely on the applicant's financial history.

Gold jewellery and ornaments between 18 karat and 22 karat purity are accepted as collateral. Gold coins up to 24 karat purity are also eligible. Items below 18 karat purity — such as 14 karat or 9 karat gold — do not qualify.

How the loan amount is calculated The loan amount is not based on what the borrower originally paid for their gold. It is calculated using the weight and purity of the gold, combined with the prevailing market rate at the time of assessment.

For valuation, Bajaj Finance uses whichever is lower between the previous day's closing price and the 30-day average closing price published by the India Bullion and Jewellers Association (IBJA) or a SEBI-regulated commodity exchange. This method ensures that the valuation is fair, consistent, and not inflated by short-term price spikes.

Decorative elements on jewellery — such as stones, enamel, or lac work — are excluded from the valuation. Only the actual gold content is counted.

Bajaj Finance offers gold loans ranging from Rs. 5,000 to Rs. 2 crore, depending on the gold's assessed value and the applicable LTV ratio.

Documents required One of the more practical aspects of a gold loan is how little paperwork it involves. Bajaj Finance requires only one valid KYC document from the following:
• Aadhaar card
• Voter ID
• Passport
• Driving licence
• NREGA job card
• Letter from the National Population Register (NPR)
No income proof, salary slips, or bank statements are required.

How repayment works Bajaj Finance offers multiple repayment options, giving borrowers the flexibility to choose a structure that suits their cash flow:
• Monthly interest payments with principal at the end of the tenure
• Bi-monthly interest payments with principal at the end of the tenure
• Quarterly interest payments with principal at the end of the tenure
• Half-yearly interest payments with principal at the end of the tenure
• Annual interest payments with principal at the end of the tenure
Partial prepayment is allowed during the loan tenure. There are no foreclosure charges, meaning borrowers can close the loan early at any time without paying a penalty.

How the gold is kept safe A concern many first-time gold loan applicants have is the safety of their gold during the loan period. Bajaj Finance stores all pledged gold in secured vaults with full insurance cover against misplacement, theft, burglary, or fire at branch, for the entire duration of the loan. The gold is returned to the borrower once the loan is repaid in full.

How to apply Borrowers can apply for a Bajaj Finance gold loan in two ways:
At a branch: Visit the nearest Bajaj Finance branch with the gold to be pledged and one KYC document. The team assesses the gold's purity and weight, confirms the eligible loan amount, and processes the disbursement — typically on the same day.

Online: Applications can be initiated through the Bajaj Finance website or mobile app. Once the application is submitted, a representative contacts the applicant to guide them through the next steps.

A note on gold loan and credit score A gold loan gets recorded in the borrower's credit report as a secured loan. The loan itself does not negatively affect the credit score. However, repayment behaviour does — timely repayments can gradually improve a borrower's CIBIL score, while missed or delayed payments can bring it down. Borrowers are encouraged to use the gold loan calculator to plan their repayments before applying.
T&C Apply.
About Bajaj Finance Limited Bajaj Finance Ltd. (‘BFL’, ‘Bajaj Finance’, or ‘the Company’), a subsidiary of Bajaj Finserv Ltd., is a deposit taking Non-Banking Financial Company (NBFC-D) registered with the Reserve Bank of India (RBI) and is classified as an NBFC-Investment and Credit Company (NBFC-ICC). BFL is engaged in the business of lending and acceptance of deposits. It has a diversified lending portfolio across retail, SMEs, and commercial customers with significant presence in both urban and rural India. It accepts public and corporate deposits and offers a variety of financial services products to its customers. BFL, a thirty-five-year-old enterprise, has now become a leading player in the NBFC sector in India and on a consolidated basis, it has a franchise of 69.14 million customers. BFL has the highest domestic credit rating of AAA/Stable for long-term borrowing, A1+ for short-term borrowing, and CRISIL AAA/Stable & [ICRA]AAA(Stable) for its FD program. It has a long-term issuer credit rating of BB+/Positive and a short-term rating of B by S&P Global ratings.

For more information, visit www.bajajfinserv.in
(Disclaimer: The above press release comes to you under an arrangement with Newsvoir and PTI takes no editorial responsibility for the same.). PTI PWR

Gold loan valuation and eligibility rules shape secured borrowing against pledged jewellery, coins, and ornaments. Gold loans are secured loans against pledged gold jewellery, ornaments or coins, with the loan amount determined by the gold's weight, purity, prevailing rate and the lender's loan-to-value ratio. Eligibility is described as simple, with Indian citizens aged 21 to 80 able to apply, while gold of 18 to 22 karat purity, and gold coins up to 24 karat purity, is accepted. Valuation excludes decorative elements and uses the lower of the previous day's closing price and the 30-day average closing price from the relevant market source.