Is It Better To Sell Gold or Get an Instant Gold Loan?

Indians invest in gold since it forms a core part of the culture and several religious festivities and also mainly due to its financial value. When you are in a financial emergency, you can sell gold and arrange for the money. But, nowadays, you don’t necessarily have to sell gold for funds as there is an option to get an instant gold loan by pledging the gold you have with a bank or NBFC. Both liquidating gold or getting a gold loan have their own set of advantages and disadvantages. Read on to know more about both.

What is an Instant Gold Loan?

A gold loan is a line of credit that you can obtain by pledging physical gold as collateral. The amount that you can obtain in a gold loan is based on the market price of the gold. Most lenders offer 70 to 75% of the gold’s value as the loan amount. Instant gold loans have lower interest rates than personal loans as you can pledge gold as collateral. You can retain your assets after paying the gold loan in full and do not have to part with them.

Banks and NBFCs also provide instant gold loans that can be availed online. Such loans are usually disbursed within 24 hours, thus helping in an urgency. Authorized representatives may process the loan at your doorstep. You don’t have to take the trouble of going to the branch physically and you don’t have to lose your assets also.

Before you take an instant gold loan, you should evaluate your EMI using the gold loan EMI calculator.

Eligibility Criteria For A Gold Loan

For lenders to provide gold loans against gold jewelry, the purity must be in the range of 18K to 24K. 24K is the purest form with 99.99% of pure gold in it.
To avail of this loan, you have to be at least 18 years old
You must be the owner of the gold assets to get the loan approved in your name

Getting An Instant Gold Loan Versus Selling - A Comparison

Let us now compare instant gold loans versus selling based on various parameters to understand which is the best option for you.

Ownership

You just have to pledge your gold as collateral in order to get funds. Once you repay the amount due, you will get the gold back. This is highly beneficial because you can still retain the ownership of your asset and it can appreciate in the future. On the other hand, when you sell gold, you will have to give up your ownership in return for funds.

Secure and Safe

Your gold will be safe as the lender stores them in highly protected vaults. The security of your assets in gold is ensured as they lock your gold away in the bank’s vault. To make sure that your gold assets are safe, some lenders may insure them as well. This is a great advantage in availing an instant gold loan.

Access to Funds Is Easy

Most lenders give online methods to apply for a gold loan. This helps in quickening the process. You don’t have to go physically to apply for the loan. The amount gets disbursed fast since these are secured loans. You will get access to funds within a day depending on the lender. Selling gold is time-consuming. You will have to find a jeweller who will give you a fair price. Going through the process of verifying the purity of gold is tedious. You may also have to produce the gold bill that you were given at the time of purchase. This is because, without this, sellers may not buy the gold. Else, they may not give you money and give you gold worth equal value in exchange.

Processes involved

An instant gold loan involves minimal documentation. You just have to submit basic KYC documents like PAN card, Aadhaar card, passport, Voter ID, etc. Whereas, selling gold is tedious and you have to find the buyer, get the purity of gold verified, and obtain the right price.

The Jeweller’s Selling Price Is Always Higher Than Their Buying Price

Jewellers determine the purity of gold based on the buying rate prevailing in the market. The jeweller’s selling price is always higher than the buying price. When you buy gold jewellery, you will have to pay making charges and taxes also. But, when you sell it to the jeweller, you will not get it back and you also have to bear the spread levied by the jeweller. So, physical gold is not so easy to sell as it is to buy.

Capital Gain

Selling gold in the market can give you a capital gain. This is subject to capital gain taxes, which will again reduce the amount you receive out of your gold loan.

Extra Lines of Credit

In some cases, you can even get an extra line of credit when availing a gold loan. This means that you can withdraw your loan amount as and when required. You only have to pay interest towards the amount that you use.