In India, gold is more than a highly valued commodity. The yellow precious metal is a sign of prosperity and good luck. Hence, wearing/ buying/owning gold is a custom for any Indian festival, and sales skyrocket on days like Akshay Tritiya and Dhanteras.
Nevertheless, you can rely on gold assets when an unforeseen financial crisis arises. During such times, deciding between getting a gold loan vs selling gold may confuse you. This post shall help to resolve your dilemma in detail while enabling you to make an informed decision.
What Do You Mean by a Gold Loan?
Gold loans are secured by NBFCs and other financial institutions, wherein the owners borrow money by pledging their gold articles. The loan amount is a certain percentage of the gold articles pledged, essentially up to 75%*. You need to repay the loan amount along with an interest rate until the specified tenure ends. It is possible to calculate the interest and EMI payable using a gold loan calculator.
Why Should You Choose a Gold Loan?
Opting for a gold loan instead of selling your gold assets can be a smart financial decision. When you choose a gold loan, you retain ownership of your gold while accessing funds to meet your urgent financial needs. This allows you to leverage the value of your gold without parting with it permanently.
Gold loans typically offer lower interest rates compared to unsecured loans because they are secured by collateral. Additionally, they provide flexibility in repayment options, allowing you to manage your finances more effectively. Another advantage is the minimal documentation required, which makes the process quick and hassle-free.
By choosing a gold loan, you can address immediate financial challenges while safeguarding your valuable assets for the future.
Perks of Obtaining a Gold Loan
Here are some of the advantages of a gold loan:
Better Convenience
Gold loans provide a lot of convenience compared to selling gold ornaments. It is simpler to pledge them for a loan as you don't have to find a buyer. Many banks or NBFCs, such as Shriram Finance, give loans secured by gold assets through online channels.
Ownership is Secured
Gold loans have a crucial benefit. The gold ornaments you use as collateral remain under your ownership. You can retrieve your assets after repaying the loan amount and interest in full. On the other hand, selling gold means giving up ownership of your items. You cannot claim to own the ornaments once the transaction is complete.
No Effect on Your Long-term Profit
Gold is an investment that many people prefer making because it often gives a good return on investment. But sometimes, we sell our gold ornaments for less money than expected, which can be disappointing. Conversely, with a gold loan, you can acquire funds at a minimum cost in terms of loan interest rate. You can sell your assets whenever you want because you still own them.
Take Advantage of Quick Access to Money for Gold
Selling gold requires time, but the value received makes it worthwhile. Alternatively, gold loans provide a faster option for obtaining funds with a high loan-to-value ratio, enabling you to borrow a significant amount using your gold ornaments.
Selling Gold in India: How Do They Benefit?
The domestic gold market has grown in the past few years, highlighting its ability to withstand global events and economic shocks.
India is a leading global consumer of gold and a favoured investment destination. Its strong liquidity and ability to surpass inflation make it highly attractive. The allure and prestige of gold are universally recognised, requiring no further explanation.
Gold is a readily tradeable asset. You can sell it for immediate cash or use it as collateral to apply for a gold loan. Due to regulations, you can a loan-to-value ratio of up to 75% of the gold, which may not be sufficient to cover your expenses. Additionally, you will have to pay interest on top of the loan amount.
Disadvantages of Selling Gold in India
- Selling gold in India means saying goodbye to your precious asset forever. Therefore, if the gold holds sentimental value, it could lead to emotional distress and potential regret in the future.
- During a market downturn, the selling price of gold may decrease due to fluctuations in its market price.
Conclusion
In conclusion, whether to sell gold or take a gold loan depends on your immediate financial needs, long-term financial goals, and risk tolerance. A gold loan is a suitable option if you need short-term funds and are confident in repaying them within a fixed period. However, if you are comfortable parting with your asset and unsure about your repayment ability, selling gold in India is a viable option. Evaluating your current financial situation thoroughly before making any decisions is crucial.
FAQs
1. Is it better to take a gold loan or sell gold?
Selling gold in India can be time-consuming, but opting for gold loans can be a faster way to acquire funds. These loans offer a higher loan-to-value ratio, allowing you to secure significant money using your gold ornaments.
2. What is the best way to sell gold?
There are three places to sell gold: jewellery stores, banks and NBFCs, and online gold buyers.
3. Can I sell my gold to Shriram Finance?
No, Shriram Finance does not purchase gold. We offer loans against gold as collateral but do not buy gold from customers.
4. Is it a good idea to get a gold loan?
Yes, getting a gold loan can be a good idea if you need quick funds. It offers lower interest rates compared to unsecured loans and requires minimal documentation. However, it's essential to repay on time to avoid losing your pledged gold.
