What Is The Maximum Tenure For Gold Loan?

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15 Nov,2022 11:35 IST 213 Views
What Is The Maximum Tenure For Gold Loan?

Generally, gold loans are short-term loans ranging from a few months to a few years. The maximum tenure a lender allows can depend on various factors, including the loan amount, the borrower's creditworthiness, the lender's policies, and prevailing market conditions. While the minimum payback term for gold loans is stipulated at no less than 6 months, some lenders provide tenures of up to 24 months.

The maximum repayment period for gold loans with IIFL Finance is 24 months. Within two years, the fixed tenure strikes the ideal mix between giving the borrower enough time to manage repayments economically and not pressuring them into payback.

Whether you are new to borrowing or not, a well-managed gold loan can be a fantastic method to raise your credit score. Gold loan repayment schedules should be planned to ensure on-time payments. Use specialised financial tools, such as the gold loan calculator, to better evaluate your loan choices before applying for a gold loan.

Gold Loan Market

In India, there are a number of institutions including banks and non-banking financial companies as well as some specialised NBFCs that offer loans against gold.

Although almost all banks—both private and government-owned—offer gold loans, the business is driven primarily by NBFCs, which control about two-third of the market share.

Also, since roughly two-third of the total gold demand comes from rural areas in India, there is a vast unregulated market for gold loans such as pawn shops and local moneylenders. It is always best to go to a regulated entity such as a bank or NBFC to ensure the safety of gold. Many of these unregulated entities are fly-by-night operators, who could disappear with the gold.

Can You Extend The Gold Loan Tenure?

An extension of the gold loan term is not feasible with IIFL Finance due to the specified length of the gold loan repayment period. Ensure to choose the loan amount after adequately considering the installments payable, interest incurred, and the overall loan liability to manage your loan repayments economically.

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Depending on the gold's purity, weight, gold loan per gram rate on the day the gold loan application is submitted, an individual's loan amount may vary.

Gold Loan Tenure

Gold loans have a relatively shorter tenure compared to other loans. Most lenders prefer shorter tenures for gold loans as volatility in the price of gold can have a huge impact on the profitability of the lender. Gold loan companies mitigate the risk of volatility in gold prices by offering shorter tenure loans to avoid any negative impact on their margins.

Typically, lenders offer gold loans starting from one month to three years. Though the maximum tenure of gold loans varies from lender to lender, it rarely goes beyond four years. In India, a majority of gold loans have tenures of less than one year.

According to a recent study of the gold loan companies, loans with one to three months tenure account for more than half the loan book in 2019. Loans for three to six months make up almost 20%, followed by loans for six to 12 months. Loans beyond one year to less than three years account for barely 5% of the loan book while that of three and five years accounted for a minuscule portion.

Unlike other loans, lenders offer flexible repayment options for gold loans. Lenders often offer customised solutions on repayment to suit the income streams of the borrowers.

In gold loans, borrowers have the option to pay equated monthly installments or pay only the interest component initially and pay the principal component at the end of the tenure of the loan. Lenders offer slightly longer tenure if the repayment of the gold loan is in EMIs and a shorter tenure if it is repaid in bullet payments or lump sum at the end of the tenure.


A gold loan is a short-term facility to ride through a financial emergency. Since gold loans are secured, interest rates on them are cheaper than personal loans and credit cards, more so if the borrower has a strong credit record.

Gold loan is the fastest-growing personal loan segment thanks to the ease of borrowing money against gold jewellery. While some banks still require prospective borrowers to visit their branch to avail a gold loan and pledge their jewellery, many lenders such as IIFL Finance have adopted a fully digital process.

Gold loans from IIFL Finance come with attractive terms to help one raise funds instantly. 

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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