Why is a Loan Better than Selling Your Gold?

Finance Dec 10, 2024 0 54 Add to Reading List

Your gold ornaments often come in handy in times of financial need. But is it necessary to sell them to fulfil your financial requirements, or is there any other way to acquire the amount and yet retain the ownership of your gold? The wise choice? Opt for gold loans.

Gold is a marker of wealth. For years people have been investing in gold and passing it down to future generations. Whether it’s as a treasured heirloom or an investment, gold holds a special place in the hearts of people, and its significance goes beyond its market value.

The precious yellow metal is crucial for economic growth and stability, making it an excellent medium of trade and exchange. It is also the best hedge against uncertain times and financial emergencies.

Another big advantage of investing in gold is that it can be purchased and sold easily. You can purchase it from different sources, such as Gold ETFs, bullion, sovereign gold bonds, digital gold and physical gold. While ETFs and sovereign bonds are emerging as popular long-term investment choices, physical gold in the form of coins, bars and jewellery is still a favoured choice for many.

When we talk about the importance of gold in times of financial hardships, many of us often contemplate liquidating our gold for immediate relief. However, with the emergence of other options like gold loans, you can access funds without selling the precious metal.

However, selling gold is still a common practice in many parts of the country. Often due to resource constraints and market conditions, many people opt to sell their gold in exchange for immediate cash.

Let's look at some common reasons why people opt to sell gold

The reason many opt to sell gold is highly influenced by individual needs, market conditions, and the inherent value they can achieve in the process. However, selling gold also leads to the loss of a highly appreciative market asset, and many buyers may offer prices below the current market rates, especially if the gold is in the form of jewellery.

Therefore, if possible, consider exploring other options and weigh the long-term impact of selling your gold. Also, ensure you are receiving the right market price, research and compare multiple borrowers, have your gold assessed for purity and weight independently to ensure transparency, and always check online for gold rate today in your city to get the most market value of your assets.

But when we talk about alternate options to selling gold, a loan definitely seems like a better option.

Why Gold Loans?

A loan against gold is a secure form of financing, which you can obtain from banks, NBFCs and other financial institutions in exchange for gold ornaments, gold jewellery and gold coins. Similar to selling gold, gold loans offer quick liquidity but without losing possession of your asset.

Benefits of Gold Loans

Secured Ownership

Selling gold means losing a valuable asset permanently. In comparison, a gold loan will allow you to unlock the value of gold without losing the ownership of your gold jewellery. This way, you can meet your financial needs and reclaim possession once the loan is repaid.

Immediate Capital Realisation

One of the most powerful benefits of opting for a gold loan is the immediate liquidity it provides. There’s no need to negotiate for a fair price or wait for disbursement. Most banks and NBFCs follow a quick appraisal regime where the purity and weight of the gold are evaluated to offer the best LTV and per-gram rate on gold loans.

Simple Application Process

Availing of a loan against gold is relatively straightforward, as compared to other loan application processes. Because the loan is secured by valuable collateral, applying for a loan involves minimal paperwork, and lenders don’t essentially require extensive credit checks.

Furthermore, since many lenders have shifted their focus to digital services and incorporated innovative approaches such as gold loans at home, applying for a gold loan online has become more convenient. These options offer more flexibility to the borrower, allowing them to experience a personalised gold loan process from the comfort of their homes.

Some other advantages of opting for a gold loan include:

These loans are often offered at preferential interest rates and a longer repayment period.
Gold loans don’t come with stipulated end-use restrictions and can be used at the borrower’s discretion.

Before applying for a loan, a thorough analysis of the gold loan provider, schemes offered and per gram rate will help you get maximum benefit on your pledged gold and a suitable borrowing experience.