What is the Typical Duration of a Gold Loan?

In December 2025, gold prices in India hit a peak of ₹1,35,000 per gram, making what is otherwise  idle household jewellery into a high-value financial engine. As more people leverage this surge to access secured credit, choosing the right duration of a gold loan becomes necessary. Selecting a suitable tenure ensures you have enough time to repay the funds without risking your pledged assets.

The minimum gold loan tenure offered by most lenders in India is 7 days. This extremely short repayment period is set up for borrowers who need funds for a very short period of time and believe they can arrange the funds to pay back the loan almost immediately.

Even though 7 days is the standard minimum, a few of the financial institutions might allow you to close the loan even sooner but you might still be charged the interest for the minimum period. Hence, it is advisable to always verify the particular lender's policy relating to pre-closure fees if you are planning to clear off the debt in less than a week.

The maximum tenure of a gold loan usually lasts up to 24 months (2 years). Although policies may differ among banks and NBFCs, most lenders still limit the standard tenure to this limit to manage the risk that comes with fluctuating gold prices. 

For those who require a more extended repayment timeline, a 2-year gold loan usually comes with lower monthly instalments, making it easier to handle the cash flow. Opting for the maximum tenure can increase your overall interest burden. 

For example, at an interest rate of 12%, the interest on a 24-month loan is significantly higher than a 12-month one. Assess your repayment capacity before committing to a long-term contract. 

Meeting the repayment deadline can sometimes be  challenging due to unforeseen financial constraints or cash flow gaps. If you reach the end of your term but are unable to pay back the principal amount, you do not necessarily have to default or lose your collateral. To support borrowers in such situations, most lenders offer a facility known as loan renewal. 

Through this process, you can effectively extend the gold loan tenure. Instead of forcing a full repayment at the end of the term, lenders let you renew the account by settling only the remaining interest and paying nominal renewal fees which generally range from 0.2% to 0.5% of the loan value. This whole procedure is like closing the old loan and starting a new loan agreement, resetting the gold loan tenure for another cycle.

However, keep in mind that during renewal, the lender will re-evaluate the worth of your pledged gold against the prevailing market rates. This is done to ensure that the loan is still within the maximum permissible Loan-to-Value (LTV) ratio; in case the prices of gold have fallen, you may have to pay the difference. This option allows extending the total duration of a gold loan without the hassle of an asset auction.

Various vital factors significantly affect the tenure a lender is willing to offer, and understanding these can help you get the best possible terms.

1. Loan amount: The amount you borrow makes a huge difference. For big loan amounts, lenders are more willing to sanction a longer tenure of 12 to 24 months to keep the EMIs within the borrower's capacity. On the other hand, smaller amounts attract short repayment periods.
2. Lender policies: Every lender has their own criteria for risk assessment. Some have a strict structure with predetermined minimum and maximum tenures, while others are more flexible and offer a duration of a gold loan according to the individual's own needs. It is advisable to compare different lender policies and pick the one that suits your time frame.
3. Interest rates: There is often a correlation between tenure and interest rates. Longer tenures might attract higher interest costs over the life of the loan. Lenders might offer shorter tenures to borrowers to help them minimise the total interest burden, or conversely, charge a higher rate for the convenience of a longer term.
4. Repayment plan: The method you choose to repay, whether it is a lump sum payment at maturity or regular EMIs can dictate the available tenure. Bullet repayment option, where you pay the entire principal and interest at the end, typically have shorter tenures (often 6 to 12 months), whereas EMI-based plans generally support longer durations up to 3 years.

The right duration of a gold loan turns your stagnant assets into an active financial advantage. Selecting a timeline that fits your actual income flow prevents repayment stress and keeps your interest costs under control. Smart tenure choices ensure your gold remains a revolving resource for whenever life requires a quick, secure financial boost.