Is it Better to Sell Gold or Get an Instant Gold Loan?

Gold has a great deal of sentimental value to Indians, as it forms a core part of the culture and several religious festivities. Besides this, Indians also rely on gold for its financial benefits, and many will invest in it to add to their wealth and tide over the crisis.

Thanks to modern financial advancements, you now have many ways to leverage your gold. For one, you can either avail of an instant gold loan or sell it. Both these have their set of benefits as well as disadvantages.

Read on to know more about instant gold loans vs selling gold and find out which one is better.

What is an Instant Gold Loan?

As its name suggests, a gold loan is a facility that allows you to access funds by pledging physical gold as collateral. The amount that you can get depends on the market price of gold as most lenders offer 70%-75% of the gold’s value as the loan amount.

Moreover, since these loans are secured against your gold assets, they generally have lower interest rates than personal loans. As opposed to selling your gold, you get to retain your pledged assets after repaying the gold loan in full.

Banks and NBFCs also offer instant gold loans that can be availed online. Such loans are generally disbursed within 24 hours, allowing you to take care of your urgent needs. Here, you may even get doorstep services, wherein authorised representatives process the loan at your home.

You never have to visit a physical branch, and your asset is safe all through. In case you are planning to avail of this loan option, you can assess your monthly outgo using the gold loan EMI calculator.

What Should Be Gold’s Purity Standards to Avail a Gold Loan?

Most lenders provide gold loans against gold jewellery with purity ranging between 18K and 24K. 24K is the purest gold form with 99.99% of pure gold in it. 

To avail of this loan, you only have to be at least 18 years old. Additionally, you must have ownership of gold assets to get the loan sanctioned in your name.

Availing a Gold Loan vs Selling Gold

Comparing the two routes is key to understanding which option is best for you. When you avail of an instant gold loan, here are some benefits that you stand to gain over selling your assets. 

1. Access to Funds

Most lenders offer online methods to apply for a gold loan which makes the entire process quick. Moreover, as these loans are secured, banks take minimal time in processing your loan.

In fact, you get access to funds within a day, depending on the lender. There are minimal delays, and you can access a high-value sanction within hours. 

On the other hand, selling gold requires you to find a seller that offers the right price. The process of getting an instant gold loan is relatively simpler.

2. Getting Maximum Value

Lenders offer interest rates based on the value of the gold. High purity gold will fetch a low rate, allowing you to leverage it optimally. Moreover, these loans are secured, and so instant gold loans have lower interest rates compared to personal or commercial loans.

On the other hand, selling your gold requires you to understand the market and the ever-changing prices. There are chances wherein you may not get the full value from a buyer.

3. Processes involved

Availing of an instant gold loan does not involve any complicated documentation. All you have to do is submit the KYC documents like Aadhar card, PAN card, passport, Voter ID, etc.

On the other hand, selling gold does require you to reach out to a buyer, get the gold valued, and settle on a suitable price. This can be simpler, with the right buyer. 

4. Ownership

With a gold loan, you simply pledge your gold as collateral in order to get funds. As such, you get the gold back once you repay the total outstanding amount. This is a key benefit to availing this loan, because the value of your asset can appreciate in the future.

When you sell your gold, you immediately lose ownership in exchange for funds.

5. Secure and Safe

Till the time you repay the loan amount, the lender stores your precious gold in secure vaults. As they lock your gold away in the bank’s vault, the security of your assets in gold is ensured. Moreover, to ensure that your gold assets are safe, some lenders may insure them as well.

There are no such benefits applicable if you choose to sell your gold, as you do not retain ownership. 

Which is Better: Instant Gold Loan vs Selling Gold?

Selling gold or availing of an instant gold loan can help you get funds to cover your monetary obligations. However, choosing one between the two depends on your financial requirements and capabilities.

While selling gold will require you to forfeit the ownership of your precious metal, availing of a gold loan allows you to retain it. Once you have repaid the loan in full, the banks return your gold jewellery.

On the other hand, you free yourself from the stress of repaying the loan, if you sell gold to meet your urgent monetary needs.

In some cases, you may even get a line of credit when availing the gold loan facility. This means that you can withdraw your loan amount as and when needed. You only have to make interest payments towards the amount that you use.

An advantage that makes availing an instant gold loan a better option than selling is that you retain ownership. Owning gold can be a boon, as the precious metal can appreciate over time, and be worth much more in the future. As such, it is a commodity that has the potential to add to your wealth, which isn’t possible once you sell it.

In conclusion, there are many ways to leverage gold, and it boils down to your financial capabilities. In fact, considering the sentimental value associated with the yellow metal, selling gold is often considered an emotional loss for Indians.

So, it may be better to pledge your gold as a security for an instant gold loan. Whatever the decision, be sure to consider all angles.

(Above mentioned article is consumer connect initiative. This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever)