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Should I get a gold loan or sell gold when in need of money

Should I get a gold loan or sell gold when in need of money

25Aug

Posted By: 24 Karat Gold

Should I get a gold loan or sell gold when in need of money

Indians, especially the housewives, have 11% of the total stock of gold in the world. This is because we Indians love buying gold, be it for our loved ones or our selves. We buy gold for weddings, on Dhantera, Diwali, Akshaya Tritiya, and several other occasions.

Buying gold is an ancient Indian tradition passed on to and wholeheartedly followed by the new generation. Gold, as we have been told, is a way out when facing any kind of emergency or financial difficulty. But what exactly should be done with the gold when you require money? This is a question that gets most people confused.

Well, if you require money but have gold locked up somewhere, there are two ways you can use it. You can either get a gold loan from one of the banks that offer such services or simply sell the gold for cash. While some may advise you to go for a gold loan, it is better to sell it instead.

Gold Loans Vs. Selling Gold

If you are wondering why selling gold is a better option than getting a gold loan, there are multiple reasons. To start with, a gold loan can get you only up to 75% of the value of your gold, which according to the guidelines of the Reserve Bank of India (RBI), happens to be the maximum value for gold loans. But most of the banks only offer 60-65% of the gold value. Doesn’t this itself sound like a loss to you?

What adds even more to it is the amount that you need to pay the banks to get your gold back. When you take a loan, be it of any kind, you need to pay it back. In the case of gold loans, to get your gold back, you need to pay the bank the amount loaned to you and the interest amount. And the interest rates for gold loans can range between 13% to 16% per annum, depending on the bank. Therefore, you not only get less money for your gold but also have to pay the banks more.

On the other hand, if you sell gold for cash, you will only be deprived of the making charges and that too only in gold jewelry. In the case of gold coins, gold ETFs and gold bonds, there is no question of making charges, and hence you get almost the full market value of your gold. Moreover, unlike for gold loans, you don’t need to worry about paying it back.

Things To Keep in Mind While Selling Gold

To make sure that you are not disappointed with the amount you get for your gold, there are a few things you need to keep in mind while selling it.

❏    The purity of the gold

Before going to sell your gold, its best to check the purity of it. This will help you get an idea of approximately how much money you can expect for it. The best way to do so is by checking the hallmark sign on it. A 958 embossed after the Bureau of Indian Standards (BIS) logo would mean 23 karats, whereas a 916 after it would mean 22. Other numbers like 875, 750, 585, or 375 would say 21, 18, 14, and 9 karats.

If you don’t have a hallmark sign on your gold, due to any reason, you should get one. This is because selling that kind of gold would not fetch you a reasonable sum of money. The buyers can quote any amount they want, and you will have no option but to settle for less. You can get the purity of your gold checked and get a report from any buyer of gold who is authorized to provide touch reports.

❏    Original bill or invoice

Besides having valid documents for the purity of the gold you want to sell, you should also have the original bill or invoice. The buyers of gold ask for it when buying any gold, be it jewelry, bonds, coins, or ETFs. And this will only help to avoid any kind of conflict of interest. If you have the original invoice or bill, it will also make it difficult for them to question your gold purity. Hence, you can get the amount you rightfully deserve for it without any kind of bargain.  

❏    Quotes on your gold

There are a lot of old gold jewelry buyers in Delhi where you can sell your gold. And they will likely have different quotes of the value of your gold. Therefore, before selling it, you should go around and get quotes on your gold from all the buyers of near you.

This will help you get an idea of the average amount you can get for your gold. And once you are done exploring your options, you will surely be able to decide which buyer you should sell your gold to make the most of it.

❏    Price of gold

After you are done checking the purity of your gold and getting quotes, there is one last thing you need to consider before selling it, and that is the price of gold. The cost of gold changes very frequently and is different almost every day.

So, if you sell your gold on a day when the price of gold is less, you may not get the amount you expect. Hence, it is always a better option to sell gold when the prices are high.

I hope you understand why selling your gold is a much better option than getting a gold loan against it. If you want to sell your gold but are confused about where to sell it or get quotes from, you can just search sell gold near me to find out the jewelers near you.

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