Gold loans are one of the most preferred loan options in India due to their quick approval, minimal documentation, and secured nature. Since they are backed by physical gold as collateral, the interest rates are comparatively lower than personal loans or credit cards. However, the gold loan interest rate can vary widely depending on the lender, loan amount, tenure, and borrower profile. In this guide, we will explain the gold loan interest rates in India, compare leading banks and NBFCs, and help you choose the most affordable option in 2025.
What is a Gold Loan Interest Rate?
A gold loan interest rate is the percentage charged by banks or NBFCs on the loan amount secured against gold jewelry or coins. It is usually charged annually (per annum) and directly impacts your EMI or repayment cost. Lower rates mean cheaper loans, while higher rates increase the total repayment amount.
Factors Affecting Gold Loan Interest Rates
Gold loan rates are not the same for every customer. Some of the major factors that affect them include:
- Loan-to-Value (LTV) ratio – Higher LTV (up to 75% of gold’s value as per RBI guidelines) may attract slightly higher interest.
- Loan amount – Bigger loans sometimes get lower interest rates.
- Borrower’s credit profile – Good repayment history may help in getting discounted rates.
- Type of lender – Banks generally offer lower interest than NBFCs, but NBFCs provide more flexible schemes.
- Repayment method – EMI, bullet payment, or overdraft facility can impact the rate.
- Tenure of the loan – Shorter-term loans may carry lower interest than long-term ones.
Comparison of Gold Loan Interest Rates – Banks vs NBFCs (2025)
Below is a table comparing interest rates of major banks and NBFCs in India as of 2025. These may vary based on location, customer profile, and scheme.
| Lender | Interest Rate (per annum) | Loan Amount Range | Processing Fee | Special Features |
|---|---|---|---|---|
| State Bank of India (SBI) | 7.90% – 9.50% | ₹20,000 – ₹50 Lakhs | 0.25% | Low rates, wide branch network |
| HDFC Bank | 8.00% – 9.90% | ₹25,000 – ₹50 Lakhs | 1% | Quick digital processing |
| ICICI Bank | 8.25% – 10.00% | ₹10,000 – ₹1 Crore | 1% | Flexible repayment options |
| Axis Bank | 8.50% – 10.25% | ₹25,000 – ₹25 Lakhs | 1% | Instant disbursal |
| Punjab National Bank (PNB) | 7.80% – 9.25% | ₹20,000 – ₹10 Lakhs | 0.50% | Attractive rates for rural customers |
| Bank of Baroda | 7.75% – 9.20% | ₹25,000 – ₹20 Lakhs | 0.25% | Transparent charges |
| Muthoot Finance (NBFC) | 9.99% – 18% | ₹1,000 – ₹1 Crore | 1% – 2% | Fast approval, minimal paperwork |
| Manappuram Finance (NBFC) | 10% – 19% | ₹1,000 – ₹50 Lakhs | 1% – 2% | Flexible repayment & doorstep service |
| Bajaj Finserv (NBFC) | 9.99% – 15% | ₹10,000 – ₹2 Crore | 1% | Online gold loan facility |
| IIFL Finance (NBFC) | 10.50% – 18% | ₹3,000 – ₹1 Crore | 1% | High-value loan, app-based service |
Bank vs NBFC Gold Loan Interest Rates
- Banks: Offer lower rates (7.5% – 10%) and are ideal for salaried or creditworthy borrowers. They may require more formalities.
- NBFCs: Offer higher rates (10% – 20%) but provide quick, hassle-free loans, flexible repayment, and higher loan-to-value ratios. Best for urgent cash needs.
Example: How Interest Affects Gold Loan EMI
Suppose you pledge gold worth ₹3 Lakhs and take a loan of ₹2 Lakhs for 12 months.
- At 8% interest rate → EMI approx. ₹17,341 (Total repayment: ₹2,08,092)
- At 15% interest rate → EMI approx. ₹18,055 (Total repayment: ₹2,16,660)
This shows that even a small difference in rates can impact the total repayment significantly.
Tips to Get the Lowest Gold Loan Interest Rate
- Compare multiple lenders before applying.
- Maintain a good credit score.
- Borrow only what you need and keep tenure shorter.
- Choose banks if you want cheaper rates, NBFCs if you want faster service.
- Negotiate with your existing bank if you have a good relationship.
Final Thoughts
Gold loans remain one of the easiest and fastest ways to access funds in India. However, the interest rate you pay will determine how affordable the loan is. While banks generally offer lower rates, NBFCs provide flexibility and convenience. Before choosing, always compare the gold loan interest rates in India, evaluate processing charges, and select a repayment option that suits your financial needs.