IIFL Gold Loan 2026: Should You Pledge Your Family Gold?

My uncle took an IIFL gold loan six months ago.

₹5 lakhs against my aunt's wedding jewelry (125 grams, 22K). Interest rate: 18% per annum. Purpose: Pay for his daughter's engineering college fees.

The plan: Repay in 6 months from year-end bonus.

What actually happened: Bonus got delayed. Month 7, IIFL sent a notice. Month 8, auction warning. Month 9, my uncle scrambled to borrow from relatives to save the jewelry.

He paid ₹5.45 lakhs to close a ₹5 lakh loan (₹45k interest in 9 months). Nearly lost jewelry worth ₹8+ lakhs because of a ₹45,000 shortfall.

This is the reality of gold loans that nobody talks about.

With gold at ₹1.35 lakh per 10 grams and IIFL Finance offering gold loans at 11.88%-27% interest, over 5,000 Indians are Googling "IIFL gold loan" daily, looking for emergency cash.

Let me tell you exactly how IIFL gold loans work, what they don't tell you, and whether pledging your family gold is actually a good idea.

What is IIFL Gold Loan? (How It Actually Works)

IIFL Finance (India Infoline Finance Limited) is one of India's largest NBFCs (Non-Banking Financial Companies) offering loans against gold jewelry.

The basic promise: Bring your gold, get instant cash (up to 75% of gold value), repay with interest, get gold back.

Sounds simple. It's not.

How the Process Works (Step-by-Step)

Step 1: Take Your Gold to IIFL Branch

• Bring jewelry (bangles, chains, coins - not ornaments with stones)
• Bring ID proof (Aadhaar, PAN, voter ID)
• No income proof needed (that's the appeal)

Step 2: Gold Appraisal

• IIFL tests purity (14K, 18K, 22K, 24K)
• Weighs net gold (minus stones, wastage)
• Values based on current gold price (₹1.35L/10g as of Feb 2026)

Example:

• You bring 100 grams 22K gold jewelry
• Net weight after testing: 95 grams (5g deducted for impurities/stones)
• Market value: 95g × ₹13,500/g = ₹12.83 lakhs
• Loan eligible: 75% of ₹12.83L = ₹9.62 lakhs

Step 3: Loan Disbursal

• Money credited to bank account (or cash in some branches)
• Takes 30-60 minutes from walking in
• Gold stored in IIFL vault

Step 4: Repayment

• Options: Bullet payment (pay at end), EMI, or interest-only EMI
• Tenure: 3-36 months typically
• Foreclose anytime (subject to charges)

Step 5: Get Gold Back

• Repay loan + interest + charges
• Collect gold from same branch
• Usually same-day return

The pitch: Fast, easy, no income proof, no credit score needed.

The reality: Interest rates are high, charges are confusing, and if you default, you lose your gold.

IIFL Gold Loan Interest Rates (Feb 2026)

According to IIFL's official website, here's what they charge:

Advertised rate: Starting at 0.99% per month (11.88% per annum)

Actual rate you'll get: 15-27% per annum (depends on loan amount, tenure, your negotiation)

Interest Rate Brackets (How It Really Works)

Loan Amount	Interest Rate (per annum)	Typical Borrower
₹25,000 - ₹1 lakh	20-27%	Small emergency, weak credit
₹1 lakh - ₹5 lakhs	15-20%	Medical bills, education
₹5 lakhs - ₹25 lakhs	11.88-15%	Business working capital
₹25 lakhs+	11.88-13%	High-value, negotiated rate

Translation: The "11.88%" rate is for rich people borrowing ₹25 lakhs+. If you're borrowing ₹2 lakhs for daughter's wedding, expect 18-22%.

Why the variation?

• Higher loan amount = lower risk for IIFL (gold value is high)
• Lower amount = admin costs don't scale, so higher rate

Compare with:

• Personal loan: 10-24% (but needs credit score, income proof)
• Credit card: 36-48% (if you're paying minimum due)
• Home loan: 8.5-9.5% (but that's secured against house, different product)

Source: BankBazaar gold loan rates

Hidden Charges Nobody Tells You About

According to IIFL's charges page, here's what you ACTUALLY pay:

1. Processing Fee

• Range: 0% to 2% of loan amount
• "Zero processing fee" schemes exist, but usually have higher interest rate
• Example: ₹5L loan × 2% = ₹10,000 upfront

2. MTM (Mark-to-Market) Charges

• Flat ₹500 (for periodic gold revaluation)
• If gold price drops, IIFL can ask for more collateral or partial repayment

3. Overdue Notice + Auction Charges

• Capped at ₹1,500 per loan account
• But this is AFTER you've defaulted (by then, bigger problems)

4. Late Payment Penalty

• 2-3% per month on overdue amount
• Compounds monthly

5. Foreclosure Charges

• If you close loan early: 2-5% of outstanding principal
• Example: Close ₹5L loan after 3 months, pay ₹10-25k penalty

Real-world calculation:

• Loan: ₹5 lakhs
• Interest rate: 18% p.a.
• Tenure: 12 months (bullet payment)
• Processing fee: 1.5% = ₹7,500
• MTM: ₹500

Total cost: ₹90,000 interest + ₹8,000 charges = ₹98,000 Effective rate: 19.6% (not 18%)

This is why people get shocked when closing the loan. They calculated 18%, but paid 19.6%.

IIFL vs Muthoot vs Manappuram: Which Gold Loan is Best?

Let's compare the big three gold loan NBFCs in India (Feb 2026 data):

Interest Rate Comparison

Company	Interest Rate Range	Advertised Rate	Actual Rate Most Pay
IIFL Finance	11.88% - 27% p.a.	0.99% p.m. (11.88%)	15-20%
Muthoot Finance	12% - 29% p.a.	12% p.a.	18-24%
Manappuram Finance	14% - 29% p.a.	14% p.a.	18-26%

Source: IndiaGold comparison

Winner: IIFL (lowest minimum rate, but rates converge at higher loan amounts)

Processing Fee & Charges

Company	Processing Fee	Other Charges
IIFL	0-2%	MTM ₹500, Overdue ₹1,500 cap
Muthoot	0-2%	Documentation ₹1,000-2,000
Manappuram	0-1.5%	Appraisal ₹500, Overdue 3% p.m.

Winner: Tie (all similar, negotiate to waive processing fee)

Loan-to-Value (LTV) Ratio

All three follow RBI guidelines: Maximum 75% of gold value.

Example:

• Gold value: ₹10 lakhs
• Max loan: ₹7.5 lakhs

In practice:

• IIFL offers 75% easily
• Muthoot sometimes goes to 70% for lower purity gold
• Manappuram offers 75% but negotiates down if your credit looks weak

Winner: IIFL (more consistent 75% LTV)

Repayment Flexibility

IIFL:

• Bullet payment (pay at end)
• Interest-only EMI monthly
• Principal + interest EMI
• Prepayment allowed (with charges)

Muthoot:

• Bullet payment
• Monthly interest payment
• Less flexible on prepayment

Manappuram:

• Similar to IIFL
• Special agricultural gold loans (if you're farmer)

Winner: IIFL and Manappuram (more options)

Branch Network & Convenience

Muthoot Finance:

• 5,600+ branches across India
• Strongest presence in Kerala, Tamil Nadu, Karnataka
• Best for: South India

Manappuram Finance:

• 4,400+ branches
• Strong in Kerala, expanding North India
• Best for: Kerala, smaller towns

IIFL Finance:

• 3,500+ branches
• Strong in Mumbai, Delhi, Bangalore, Hyderabad
• Best for: Metro cities

Winner: Muthoot (widest reach, easier to find branch)

Customer Service & Trust

According to Business Standard market analysis:

Muthoot Finance:

• Oldest (since 1939), family-run, high trust
• Conservative lending (less likely to harass)
• Customer reviews: 4.2/5 (Google, Trustpilot)

IIFL Finance:

• Corporate, aggressive sales
• Faster approvals, but more push to upsell insurance
• Customer reviews: 3.8/5

Manappuram Finance:

• Mid-sized, Kerala roots
• Good customer service in South, mixed elsewhere
• Customer reviews: 3.9/5

Winner: Muthoot (reputation + trust matters when you're pledging family gold)

My Recommendation

Go with IIFL if:

• You need ₹5 lakhs+ (better rates at higher amounts)
• You're in metro city (branch accessibility)
• You want digital experience (IIFL app is better)

Go with Muthoot if:

• You need ₹50k - ₹3 lakhs (small amounts, they're more accommodating)
• You're in South India or smaller town
• You value trust + heritage (family has banked with Muthoot for decades)

Go with Manappuram if:

• You're in Kerala (best network there)
• You're a farmer (special agri gold loan rates)
• IIFL and Muthoot branches are far

Honestly? All three are similar. Interest rates differ by 1-2% max. Choose based on which branch is closer + which staff is more helpful when you visit.

Don't choose based on ads. Walk into all three branches with your gold, get quotes, compare, negotiate.

When Gold Loan Makes Sense (vs Alternatives)

Gold loan isn't always the answer. Let's compare:

Gold Loan vs Personal Loan

Factor	Gold Loan	Personal Loan
Interest rate	12-27%	10-24%
Approval time	30 mins	1-7 days
Documentation	Minimal (ID + gold)	High (income, ITR, bank statements)
Credit score needed	No	Yes (700+ for good rates)
Loan amount	Up to 75% of gold value	Based on income (up to 30x monthly salary)
Risk	Lose gold if default	Credit score damage, legal action

Gold loan wins if:

• You have poor credit score (600 or below)
• You need money TODAY (emergency)
• You don't have income proof (informal sector worker)

Personal loan wins if:

• Your credit score is good (750+) - you'll get 10-14% rate vs 18% gold loan
• You don't have gold
• You want longer tenure (5-7 years vs 1-3 years for gold)

Gold Loan vs Credit Card Cash Advance

Credit card cash advance:

• Interest: 36-48% p.a.
• Cash advance fee: 2.5-3% upfront
• No grace period (interest starts from day 1)

Gold loan:

• Interest: 12-27% p.a.
• Processing fee: 0-2%
• Structured repayment

Gold loan wins always. Never take credit card cash advance if you have gold to pledge.

Gold Loan vs Selling Gold

If gold is worth ₹10 lakhs and you need ₹5 lakhs:

Option A: Sell 50 grams gold

• Get: ₹6.75 lakhs (50g × ₹13,500)
• Lose: Gold (can't get back)
• Capital gains tax: 20% STCG (if held less than 3 years)

Option B: Gold loan ₹5 lakhs

• Get: ₹5 lakhs
• Pay: ₹5.9 lakhs to close (after 1 year at 18%)
• Keep gold (value might appreciate)

Gold loan wins if:

• You think gold will appreciate (from ₹1.35L to ₹1.5L in 1 year = 11% gain, offsets 18% interest partially)
• It's family jewelry (sentimental value)
• You'll get money to repay within 6-12 months

Selling wins if:

• You won't be able to repay (better to sell now than lose to auction)
• Gold price is high (book profits)
• No emotional attachment

Read our gold rates guide to understand gold price trends.

Gold Loan vs Borrowing from Family

Borrowing from relatives:

• Interest: 0% (usually)
• Risk: Family tension, ego issues
• Approval: Depends on relationship

Gold loan:

• Interest: 12-27%
• Risk: Lose gold
• Approval: Guaranteed if you have gold

My take: If family can lend interest-free and you're 100% sure you can repay, borrow from family.

But if:

• You're not sure about repayment timeline
• Family relationship is strained
• You don't want to explain why you need money

Go with gold loan. Paying 18% interest is better than destroying family relationships.

The Auction Risk Nobody Talks About

Here's what happens if you don't repay IIFL gold loan:

Timeline of Default

Month 1 after due date:

• Reminder SMS/email
• Late payment penalty: 2-3% per month

Month 2:

• Phone calls from collections team
• Overdue notice (₹500-1,000 charge)

Month 3:

• Formal auction notice sent
• 30 days to settle outstanding dues
• At this point: Principal + Interest + Penalties + Auction charges

Month 4:

• Gold auctioned by IIFL
• They recover loan amount + charges
• Excess amount (if any) returned to you

Real Auction Example

Original loan:

• ₹5 lakhs borrowed against 100 grams gold (worth ₹13.5 lakhs)
• Interest rate: 18% p.a.
• Defaulted after 10 months

At auction:

• Outstanding: ₹5L + ₹75k interest + ₹15k charges = ₹5.9 lakhs
• Gold sold at auction: ₹12.5 lakhs (below market, auction discount)
• IIFL keeps: ₹5.9 lakhs
• You get back: ₹6.6 lakhs

You lost:

• 100 grams gold (gone forever)
• But got ₹6.6L (better than ₹0)

Sounds okay? NO. Because:

1. Your ₹13.5L gold sold for ₹12.5L (auction discount)
2. You paid ₹90k in interest + charges for nothing
3. Emotional cost: That was your mother's wedding jewelry

Auction is NOT a bailout. It's a disaster.

How to Avoid Auction

If you can't repay on time:

Option 1: Partial Payment

• Pay interest + extend tenure
• IIFL usually allows 1-2 extensions
• Additional charges apply

Option 2: Top-Up/Renewal

• Borrow more (if gold value has appreciated)
• Use new money to pay old interest
• Risky: You're adding to debt

Option 3: Sell Part of Gold

• Ask IIFL to sell 30-40 grams from your pledged gold
• Use proceeds to repay remaining loan
• You keep 60-70 grams

Option 4: Emergency Loan

• Borrow from friend/family for 1 month
• Close IIFL loan
• Repay friend later
• Saves auction disaster

What my uncle should have done:

• Month 7: Partial payment (interest + extend 3 months)
• Month 8: Sell 20 grams from pledged 125 grams
• Month 9: Use year-end bonus to close remaining

What he actually did:

• Panicked, borrowed ₹5.45L at 24% from private lender
• Closed IIFL, now has another high-interest debt

Lesson: Plan repayment BEFORE taking loan. If plan fails, act in Month 1, not Month 8.

Hidden Risks of Gold Loans (The Fine Print)

1. Mark-to-Market (MTM) Risk

What it means: If gold price drops significantly, IIFL can ask for:

• More collateral (pledge more gold), OR
• Partial loan repayment (reduce outstanding)

Example:

• You borrowed ₹5L against 100g gold when gold was ₹13,500/g (₹13.5L value)
• Gold drops to ₹10,000/g (₹10L value)
• LTV shoots up from 37% to 50%
• IIFL sends notice: "Pledge 25g more gold or repay ₹1.5L"

Likelihood in 2026: Low (gold at ₹1.35L is near all-time high, unlikely to crash)

But: Gold can correct 10-15% in a year. Be aware.

2. Lock-In Period Penalties

Some IIFL schemes:

• Lock-in for 6-12 months
• If you close early: 3-5% penalty
• Advertised as "lower interest rate" (12% vs 18%)

The catch: Lower rate is tied to staying locked-in. If you close in month 4, penalty wipes out savings.

Read fine print carefully.

3. Insurance Upselling

At IIFL branch:

• They push gold loan insurance (₹500-2,000 premium)
• "Covers loan in case of death/disability"

Reality:

• You don't need this (gold itself is collateral)
• If you die, family repays loan from gold sale
• Insurance is IIFL's commission-earning product

Say NO to insurance unless you have specific reason.

4. Forced Renewals/Roll-Overs

Near loan maturity:

• IIFL calls: "Extend for 6 more months? Just pay ₹10k interest, we'll renew"
• Sounds easy

Problem: You're not reducing principal, only paying interest.

After 2-3 renewals, you've paid ₹30-40k in interest, loan is still ₹5L.

This is debt trap territory.

Tax Implications of Gold Loans

Good news: Gold loan interest is NOT tax deductible.

Wait, that's NOT good news.

Unlike:

• Home loan interest: Tax deductible under Section 24(b)
• Education loan interest: Deductible under Section 80E
• Gold loan: Zero tax benefit

Why?

• Gold loans are typically for consumption (weddings, emergencies)
• Not for income-generating purposes
• Hence, no Section 80C or any deduction

Exception:

• If you take gold loan for business and use funds for business working capital
• You can claim interest as business expense
• But you need proper accounting, GST registration, ITR filing

For 99% of borrowers: Gold loan is post-tax expense. Budget accordingly.

Read our tax 80C guide for deductions you can actually claim.

Should You Take IIFL Gold Loan? (Decision Framework)

TAKE Gold Loan IF:

1. Medical Emergency

• Hospitalization, surgery, critical care
• Need cash in 24-48 hours
• No time to arrange personal loan

Gold loan beats: Credit card (48% interest), private lenders (36%+)

2. Short-Term Business Working Capital

• You're trader/shopkeeper
• Need ₹5-10L to buy inventory for festive season
• Will sell in 2-3 months and repay

Gold loan beats: Business loan (takes 2 weeks to approve)

3. Daughter's Wedding (But You're Getting Money Soon)

• Wedding is in 2 months, costs ₹8 lakhs
• Your FD matures in 3 months (₹10 lakhs)
• Bridge gap with gold loan, close after FD matures

Gold loan beats: Breaking FD early (lose 1-2% interest penalty)

4. Avoiding Worse Debt

• You're about to miss credit card payment (₹2L outstanding)
• Credit card charges 42% p.a.
• Take ₹2L gold loan at 18%, close credit card

Gold loan beats: Credit card default (ruins credit score + 42% interest)

DO NOT TAKE Gold Loan IF:

1. Regular Monthly Expenses

• Your salary doesn't cover monthly bills
• You're using gold loan to pay rent, groceries

This is financial disaster. Gold loan is for emergencies, not lifestyle funding.

You need to cut expenses or increase income, not borrow.

2. Speculative Investments

• "I'll take gold loan, invest in stocks, make 25% returns, repay loan"
• What if stock market crashes 30%?
• You lose money AND gold

Never borrow to invest unless you're experienced investor with proven track record.

3. Consumer Purchases

• New car, new TV, gadgets
• These are wants, not needs

If you can't afford it without loan, you can't afford it.

4. Paying Off Other Loans

• Taking gold loan to pay personal loan
• Taking gold loan to pay home loan EMI

You're not reducing debt, just shifting it from one bucket to another.

Exception: If interest rate is significantly lower (paying 24% personal loan with 15% gold loan), it MAY make sense. But usually, this is debt spiral.

5. No Repayment Plan

• "I'll figure out later how to repay"
• "Let's take loan first, think later"

Without plan, you WILL default. And then lose gold to auction.

Real Use Cases: When I'd Take Gold Loan

I'll be honest: I've never taken a gold loan. But here's when I would consider it:

Scenario 1: Medical Emergency

Situation:

• Father needs emergency heart surgery
• Hospital bill: ₹8 lakhs (not fully covered by insurance)
• Need cash in 24 hours

What I'd do:

1. Take ₹8L gold loan at 18% (mother's jewelry, 150 grams)
2. Pay hospital
3. Sell non-essential assets over next 3 months (stocks, debt funds)
4. Close gold loan in month 4
5. Total interest cost: ₹48,000 for saving father's life (worth it)

Scenario 2: Business Opportunity (Time-Sensitive)

Situation:

• Wholesaler offering 30% discount on bulk purchase (₹10L inventory)
• Deal valid for 3 days only
• I can sell this inventory in 45 days at normal price
• Profit margin: ₹4 lakhs

What I'd do:

1. Take ₹10L gold loan at 15%
2. Buy inventory
3. Sell over 45 days
4. Close loan in month 2
5. Interest cost: ₹25,000; Profit: ₹4L; Net gain: ₹3.75L

This makes business sense.

Scenario 3: Bridging Cash Flow Gap

Situation:

• Sold flat, buyer will pay ₹50L in 60 days (registry in process)
• Need ₹15L NOW for kid's college admission (deadline in 1 week)

What I'd do:

1. Take ₹15L gold loan at 14%
2. Pay college fee
3. Close loan when flat sale completes (60 days)
4. Interest cost: ₹35,000 vs losing admission seat (worth it)

When I Would NOT Take Gold Loan

Scenario: Lifestyle Funding

• "I want to buy iPhone 16 Pro, cost ₹1.5 lakhs"
• "I'll take gold loan, pay in EMIs"

NO. If I don't have ₹1.5L savings for a phone, I don't buy the phone. Period.

Scenario: Stock Market Investment

• "Nifty has corrected 10%, great buying opportunity"
• "Let me take ₹5L gold loan, invest, make returns"

NO. Stock returns are uncertain. Loan interest is certain. Don't borrow to invest unless you're full-time trader with risk capital.

IIFL Gold Loan: Step-by-Step Process (From Branch Visit to Disbursal)

Let me walk you through what actually happens:

Before Branch Visit

1. Check Gold Eligibility

• Jewelry (bangles, chains, coins)
• Purity: 14K to 24K gold (22K is most common)
• No stones (or minimal stones, deducted from weight)

2. Know Your Loan Requirement

• How much you need (₹50k vs ₹5L)
• Repayment timeline (3 months vs 12 months)
• Repayment ability (monthly income vs lump sum expectation)

3. Documents to Carry

• PAN card (mandatory)
• Aadhaar card (address proof)
• Bank statement (for disbursal account)
• Gold jewelry

At IIFL Branch

Step 1: Registration (5 mins)

• Fill form with basic details
• Provide PAN + Aadhaar

Step 2: Gold Appraisal (15 mins)

• They test purity (acid test, karat meter)
• Weigh net gold (deduct stones, thread)
• Check for hallmark (BIS certification helps, but not mandatory)

Example:

• You bring 100g mixed jewelry
• After testing: 80g 22K, 15g 18K, 5g stones/wastage
• Net gold value calculation:
  • 80g 22K = 80 × (22/24) = 73.33g pure gold
  • 15g 18K = 15 × (18/24) = 11.25g pure gold
  • Total: 84.58g pure gold
  • Value: 84.58g × ₹13,500 = ₹11.42 lakhs

Step 3: Loan Offer (5 mins)

• IIFL offers 75% of ₹11.42L = ₹8.56 lakhs max
• You decide how much you want (let's say ₹5L)
• They quote interest rate (depends on amount, but let's say 18%)

Step 4: Scheme Selection (10 mins)

• Option A: Bullet payment (pay entire ₹5L + interest at end)
• Option B: Monthly interest payment (pay ₹7,500/month × 12, then ₹5L at end)
• Option C: EMI (pay ₹46,200/month × 12, loan closes)

Most people choose Option A or B (lower monthly burden).

Step 5: Agreement Signing (10 mins)

• Loan agreement (read terms carefully)
• Gold pledge document
• Photograph of gold taken (for records)
• Your signature, thumb impression

Step 6: Gold Storage + Disbursal (10 mins)

• Gold sealed in tamper-proof packet
• Stored in IIFL vault
• Money transferred to your bank account (NEFT/RTGS)

Total time: 45-60 minutes from entry to money in bank.

After Disbursal

Week 1:

• Confirmation SMS with loan account number
• First repayment due date mentioned

Every month:

• Reminder SMS for payment due
• If choosing monthly interest: Pay via NEFT/branch visit

At Loan Maturity:

• Pay outstanding amount
• Collect gold from same branch (bring ID)
• Verify gold (check weight, purity matches records)
• Sign receipt, take gold home

Simple process. The complexity is in repayment planning.

Common Mistakes People Make with Gold Loans

From my uncle's experience and others I've seen:

Mistake 1: Borrowing More Than Needed

Scenario:

• You need ₹2 lakhs for daughter's school fees
• IIFL approves ₹8 lakhs (max LTV on your gold)
• You think: "Let me take ₹8L, invest ₹6L somewhere, earn returns"

Reality:

• You took unnecessary debt (₹6L)
• Interest on ₹8L at 18% = ₹1.44L per year
• You invested ₹6L in FD at 7% = ₹42k per year
• Net loss: ₹1.08L per year

Rule: Borrow only what you need. Don't treat gold loan as investment capital.

Mistake 2: Choosing Bullet Payment Without Plan

Scenario:

• You borrow ₹5L, choose bullet payment (pay at end of 12 months)
• Thinking: "I'll save and pay after 1 year"

Reality:

• Month 12 comes
• You've saved ₹3L (life expenses happened)
• Outstanding: ₹5L + ₹90k interest = ₹5.9L
• You're ₹2.9L short
• Panic, extend loan, pay more interest

Better approach:

• Choose monthly interest payment (₹7,500/month)
• Forces you to budget monthly
• At year-end, pay only ₹5L principal (you've been paying interest monthly)

Mistake 3: Not Reading Loan Agreement

Scenario:

• You sign agreement without reading
• Later discover: 5% foreclosure penalty, 3% late payment fee

Result:

• You try to close early (got bonus) → 5% penalty = ₹25k
• You delay payment by 10 days → 3% penalty = ₹15k

Rule: Read every line. Ask questions. Get clarifications in writing (WhatsApp/email).

Mistake 4: Pledging Entire Family Gold

Scenario:

• You need ₹3 lakhs
• You have 150g gold
• You pledge all 150g (get ₹10L loan limit, but take ₹3L)

Problem:

• If you default, IIFL auctions ALL 150g (not just proportional)
• You lose entire family gold for ₹3L loan

Better approach:

• Pledge only 50g gold (enough for ₹3.75L loan)
• Keep 100g at home (safe)
• If you default, maximum loss = 50g

Never put all eggs in one basket.

Mistake 5: Ignoring Early Warning Signs

Scenario:

• Month 8: You miss interest payment
• IIFL sends reminder
• You ignore (thinking "I'll pay next month")

Result:

• Penalties pile up
• By month 10, you owe extra ₹30k in penalties
• Loan becomes harder to close

Rule: If you miss ONE payment, immediately call IIFL. Negotiate extension. Don't ignore.

Frequently Asked Questions

What is the maximum loan amount I can get from IIFL gold loan?

IIFL offers up to 75% of gold value (as per RBI guidelines). Maximum loan amount depends on gold weight and current gold price (Feb 2026: ₹1.35L/10g for 24K). Example: 100g 22K gold worth ₹13.5 lakhs = ₹10.12 lakhs max loan at 75% LTV. However, actual disbursement may be lower (70-72%) if gold purity is questionable or you're borrowing small amount (₹50k-1L). Always ask for exact LTV before pledging. No upper cap on loan amount - can pledge 500g gold for ₹50+ lakh loan.

Is IIFL gold loan better than Muthoot Finance?

Both are similar - rates differ by 1-2% max. IIFL has slightly lower minimum rates (11.88% vs Muthoot's 12%) and better digital experience, but Muthoot has wider branch network (5,600 vs IIFL's 3,500) and stronger brand trust (80+ years vs IIFL's 30 years). Choose based on: Branch proximity (whichever is closer), Actual quoted rate (walk into both, compare), Loan amount (IIFL better for ₹5L+, Muthoot for ₹50k-3L). In South India, Muthoot is preferred. In metros, IIFL is competitive.

What happens if I cannot repay IIFL gold loan on time?

Timeline: Month 1-2 after default - Reminders and late fees (2-3% per month). Month 3 - Formal auction notice sent. Month 4 - Gold auctioned to recover dues. Process: IIFL sells your gold at auction (usually 5-10% below market rate), recovers loan + interest + penalties + auction charges (₹1,500), returns excess (if any). To avoid: Pay interest monthly and request tenure extension, OR sell part of pledged gold to close remaining loan, OR arrange emergency loan from family to save gold.

Can I withdraw gold during loan tenure?

No, pledged gold remains in IIFL vault until full loan repayment. However, partial release is possible: If you pledged 100g gold and borrowed ₹5L, you can repay ₹2L and get 30-40g back (proportional release). IIFL charges processing fee (₹500-1,000) for partial release. Not all branches allow this - ask upfront. Better approach: Only pledge what you need. If you need ₹3L loan, pledge 50g gold (enough for ₹3.75L eligibility), keep 50g at home.

Is interest on IIFL gold loan tax deductible?

No, gold loan interest is NOT tax deductible under any section of Income Tax Act 1961. Unlike home loans (Section 24, ₹2L deduction) or education loans (Section 80E, full interest deductible), gold loans offer zero tax benefits. Interest is post-tax expense. Exception: If you take gold loan for business working capital and maintain proper accounts, you can claim interest as business expense under Income from Business section. But for 99% of personal gold loans (medical, wedding, consumption), no tax benefit.

What documents are needed for IIFL gold loan?

Minimal documentation: PAN card (mandatory), Aadhaar card (address proof), Bank account details (for disbursal), Gold jewelry. No income proof, ITR, salary slips, or credit score required. This makes gold loans accessible to self-employed, informal sector workers, housewives, and those with poor credit scores (even 550 CIBIL). Process takes 30-60 minutes from document submission to money in bank. Some branches accept voter ID or driving license instead of Aadhaar.

Can I take IIFL gold loan online?

Partially. You can apply online at iifl.com/gold-loans, get pre-approval, and book appointment. But physical branch visit is MANDATORY for gold appraisal (purity testing, weighing, storage). Fully online gold loans are not possible - gold must be physically verified and securely stored in IIFL vault. Process: Apply online (5 mins) → Visit branch with gold + documents (30 mins) → Money credited same day. Digital gold (Paytm Gold, PhonePe Gold) cannot be used as collateral for physical gold loans.

How long does IIFL gold loan approval take?

30-60 minutes from walking into branch to money in your bank account. Breakdown: Registration (5 mins), Gold appraisal and testing (15 mins), Loan offer and scheme selection (10 mins), Agreement signing (10 mins), Disbursal via NEFT/RTGS (10-30 mins). This is why gold loans are preferred for emergencies - fastest credit available. Personal loans take 1-7 days, home loans take 15-30 days. Gold loan is instant. Some branches offer cash disbursal (limits apply, typically up to ₹50,000 in cash).

Can I extend my gold loan tenure if I can't repay on time?

Yes, most IIFL schemes allow 1-2 tenure extensions. Process: Before due date (don't wait till default), visit branch or call customer care, pay accrued interest + extension fee (₹500-1,000), extend tenure by 3-6 months. However, this increases total interest cost. Example: ₹5L loan at 18% for 12 months = ₹90k interest. Extend to 18 months = ₹1.35L interest (₹45k extra). Better than auction, but expensive. Limit: Usually 2 extensions max. After that, IIFL may not allow further extensions and proceed to auction.

My Final Take: Should You Use Gold as ATM?

Gold loans exist for a reason: Emergencies happen. Medical bills, job loss, business cash crunch.

But gold loans are expensive credit (12-27% vs 8.5% home loans or 10% personal loans for good credit).

Use gold loans as last resort:

1. Exhaust emergency fund first
2. Try personal loan (if credit score is good)
3. Borrow from family (if possible)
4. THEN consider gold loan

Never use gold loan for:

• Lifestyle purchases (car, gadgets, vacation)
• Stock market speculation
• Regular monthly expenses (salary gap funding)

Gold loan is bridge finance. It gets you from Point A (emergency) to Point B (when you get money to repay).

If you CAN'T get to Point B (no clear repayment plan), don't take gold loan. You'll lose your family jewelry to auction.

My rule: Only take gold loan if:

1. You need money urgently (24-48 hours)
2. You have clear repayment plan (3-6 months max)
3. Alternatives are worse (credit card default, private lender, etc.)

Otherwise, save up and pay in cash. Debt-free is always better than pledging gold.

For broader financial planning, read our emergency fund guide to avoid needing gold loans in the first place, and our home loan rates guide to compare different credit products.

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Disclaimer: This article is for educational purposes only and not financial advice. Gold loan terms, interest rates, and charges vary by lender and are subject to change. IIFL Finance, Muthoot Finance, and Manappuram Finance are independent entities; rates mentioned are based on publicly available information as of February 2026. Always read loan agreement carefully and consult a financial advisor before borrowing. The author has no affiliation with any gold loan company mentioned.

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Sources:

• IIFL Finance - Gold Loan Interest Rates
• BankBazaar - Gold Loan Rates 2026
• IndiaGold - IIFL vs Muthoot vs Manappuram
• Business Standard - Gold Loan NBFCs Market Update
• Reserve Bank of India - Gold Loan Guidelines
• Upstox Market Analysis - Gold Loan Companies