Bajaj Finance Highlights Key Considerations for Borrowers Before Taking a Gold Loan

A simple look at how the Bajaj Finance Gold Loan interest rate works, how gold is valued, and what else borrowers should check before they pledge their gold.

PUNE, INDIA, October 9, 2026 /EINPresswire.com/ -- Gold can be more than an asset kept in a locker. When funds are needed, a gold loan can help borrowers access money without selling their gold. However, before pledging gold, borrowers should understand two different aspects of the loan: the interest rate that determines the cost of borrowing and the gold valuation that helps determine how much they can borrow.

With a Bajaj Gold Loan, the applicable interest rate ranges from 9.50% to 24.25% per annum. The applicable rate depends on factors such as the loan amount, tenure and repayment option. Understanding these factors can help borrowers compare their borrowing requirement with the overall cost of the loan.

Gold price and gold loan interest rate are different

A common point of confusion for borrowers is the relationship between gold prices and gold loan interest rates. The two serve different purposes.
Changes in gold prices can affect the assessed value of pledged gold and, therefore, the loan amount a borrower may be eligible for. The Bajaj Gold Loan interest rate, on the other hand, determines the cost of borrowing and depends on the applicable loan terms and the lender's pricing policy.
This means a rise in the gold price does not automatically mean that the interest rate on a gold loan will rise.

How is gold valued for a gold loan?

The retail price of jewellery is not the same as the value considered for a gold loan. During valuation, only the eligible gold content is considered. Stones, gems and other embellishments are excluded.

Bajaj Finance considers the lower of the previous day's closing price or the 30-day average closing price for the relevant purity, as published by the Indian Bullion and Jewellers Association (IBJA) or a SEBI-regulated commodity exchange. This provides a consistent basis for assessing the value of eligible gold.
The purity and net gold content of the pledged jewellery, ornaments or coins also matter. Jewellery and ornaments between 18K and 22K purity and gold coins up to 24K purity may be eligible, subject to applicable terms.

Once the eligible gold value is established, the applicable Loan-to-Value (LTV) limit determines how much of that value may be available as a loan.
How much can someone borrow against their gold?

Once the gold's value is worked out, a limit called Loan-to-Value, or LTV, decides how much of that value becomes the loan amount. With Bajaj Finance, the maximum LTV eligible for a loan depends on the loan amount and cannot be more than the limits given:

● For loans up to Rs. 2.5 lakh: up to 85% LTV
● For loans above Rs. 2.5 lakh up to Rs. 5 lakh: up to 80% LTV
● For loans above Rs. 5 lakh up to Rs. 2 crore: up to 75% LTV

For example, if eligible gold is assessed at Rs. 2 lakh, an LTV of 85% would allow a maximum eligible loan amount of Rs. 1.7 lakh, subject to the applicable terms and eligibility criteria.

Bajaj Finance offers gold loans from Rs. 5,000 to Rs. 2 crore, subject to eligibility and applicable terms.

How does someone repay the loan?

Borrowers can choose a repayment structure based on their loan terms and financial requirements. They can choose between two ways to repay:

● Bullet Repayment: The loan amount and interest are paid together at the end of the loan period
● Regular Repayment: Interest is paid every six months, and the loan amount is paid at the end

Understanding the repayment structure in advance can help borrowers estimate their interest outgo and plan repayments comfortably.

What should borrowers check before applying?

Before applying for a gold loan, borrowers should consider how much they actually need rather than borrowing the maximum amount available. They should also understand the applicable interest rate, tenure, repayment option and other charges before accepting the loan.

The value of the pledged gold is assessed through a transparent process. The gold is evaluated for purity and weight in the presence of the customer, helping the borrower understand how the gold's assessed value translates into the eligible loan amount.

Borrowers should also check the applicable LTV limit and ensure that the repayment schedule fits their financial plans.

A clear understanding of the interest rate, gold valuation, LTV and repayment terms can help borrowers make a more informed decision before pledging their gold.

*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

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