What is the Maximum Gold Loan Tenure?

The maximum tenure for a Gold Loan can range anywhere from 3 to 36 months and depends on a wide range of factors. This includes the lender's terms and conditions, your own requirements, and your chosen repayment method. Let’s take a closer look at maximum Gold Loan tenures in India through this blog. Continue reading to know more!

What is the Maximum Tenure on Gold Loans?

In India, the typical maximum tenure for a Gold Loan is 24 - 36 months i.e two to three years for long-term loans. On the other hand, the tenure of a short-term Gold Loan can be 3 - 6 months. While these are some of the most commonly offered tenures, some lenders also offer tenures up to 60 months (five years). Plus, while some lenders may offer flexible repayment tenures, others have a fixed tenure offered for Gold Loan repayment, depending on the nature of the loan.

In all cases, the RBI’s regulations state that lenders must return the pledged gold within seven working days after the full repayment of the loan amount.

Long-Term Gold Loans

Long-term loans that pledge gold as collateral typically involve monthly EMI payments, with the maximum length of time being 24 - 36 months. So, your entire loan plus interest would have to be paid off across 24 - 36 EMIs. You do have the option to either opt for a shorter tenure or to pay off the loan amount earlier despite the predetermined tenure (provided there are no prepayment penalties).

Short-term Gold Loans

Short-term gold loans are typically paid off in a lump sum at the end of the loan tenure, known as bullet repayment. While 6-month tenures have been the norm for a while, recent regulation changes by the RBI have capped the duration of gold loans with bullet repayments at 12 months. Note that some lenders even offer tenures of one day, ideal for immediate unplanned expenses when liquidating funds may take time.

Also Read: What is Gold Loan or Loan Against Gold?

Factors that Influence Gold Loan Tenure

• Loan Amount: If you’re borrowing a large sum of money, choosing a longer loan tenure would be ideal. This allows you to set aside smaller amounts for your monthly EMIs as opposed to larger amounts on a shorter tenure. It makes repayment more manageable.
• Lender Policies: As mentioned, your tenure also depends on whether the lender is willing to offer you your requested duration of time. If they have fixed Gold Loan repayment tenures, the question of choice doesn’t arise, and you must plan your repayment according to their tenure.
• Repayment Plan: Choosing bullet repayment for your short-term loan means the maximum tenure is a year. Opting for EMIs, on the other hand, gives you longer tenures for higher amounts.
• Loan-to-Value Ratio (LTV): A Loan-to-Value Ratio for Gold Loans is the percentage of the gold’s value that the lender is willing to give you as a loan amount. Lenders typically prefer shorter tenures for high LTV ratios, and your loan is likely to also come with a higher interest rate. On the other hand, a lower LTV ratio means a longer tenure.
• Credit Profile: Your credit profile, including your overall creditworthiness, repayment history, and evidence of a stable income source can also impact the availability of stringent or flexible loan tenures.

Also Read: How to Calculate Gold Loan Interest Rates

Impact of Tenure on Loan Repayment Amounts

Choosing the right tenure goes far beyond just picking a duration over which to repay the loan; it impacts both your interest rate and the final amount you have to pay. Here’s an example.

Consider pledging gold worth ₹1,00,000—with a lender applying a 75% LTV, you would be eligible for a loan of ₹75,000. At an annual interest rate of 10%, here’s what different tenures and interest rates will look like:

6-month Repayment Tenure:

12-month Repayment Tenure:

24-month Repayment Tenure:

To Conclude

The maximum tenure for a Gold Loan can depend on a wide variety of factors. Long term gold loans can have a tenure of up to 36 months while short term Gold Loan tenure can be even for one day. The tenure in turn, depends on a variety of factors including your credit profile, lender’s internal policies, loan amount, and your repayment plan (EMI or bullet repayment).

In all cases, it is recommended to read through a Gold Loan terms and conditions and offered tenures before taking on a loan. Remember to pick a tenure that aligns with your financial situation and repayment capacity.

Poonawalla Fincorp offers gold loans of up to ₹50 Lakhs, with tenures of up to 12 months and attractive terms and minimal early closure fees. Apply now!

Frequently Asked Questions

What is the maximum duration of a Gold Loan?

Gold loan tenures can start from just 1 day and can go up to 36 months, based on the lender, loan amount and a wide variety of other factors. In certain cases, some lenders may extend the tenure to 48 months under select schemes.

What are the new rules for Gold Loans?

According to the latest RBI guidelines, LTV limits are now tiered based on loan amounts. Loans up to ₹2.5 Lakh can have an LTV of up to 85%, those between ₹2.5 Lakh and ₹5 Lakh can go up to 80%, while loans above ₹5 Lakh are restricted to a 75% LTV cap. Borrowers must also furnish proof of ownership for the gold they pledge.

What is the RBI circular regarding Gold Loans?

As per the latest RBI regulations for gold loans, only gold jewellery and specially minted coins of 22 carats or higher (issued by banks) are permitted as collateral. Additionally, the total gold pledged cannot exceed 1 kg, and within that, a maximum of 50 grams can be in the form of coins.

What happens if we don’t repay the Gold Loan?

If you do not repay your Gold Loan by the due date despite reminders, the lender has the right to recover the dues by selling or auctioning the pledged gold. Generally, prior notice is issued before such action is taken. Once the gold is auctioned, it cannot be reclaimed.

How much maximum loan amount can I get from a Gold Loan?

With Poonawalla Fincorp, you can get a maximum Gold Loan amount of up to ₹50 Lakhs with a maximum tenure of up to 12 months.