Are Gold Loans a Good Option During Covid-19?

With Covid-19 causing a nationwide lockdown and a shrinkage of everything, from financial activities to the paychecks received by various employees, the only ray of hope in these difficult times is a gold loan, with the price of gold increasing rapidly. Gold loans are coming to the rescue as most people prefer them over any other loan, and here’s why.

Gold Loan – Better Than Personal Loan.

There are many reasons why you should get a gold loan instead of a personal loan:

  1. First of all, because they don’t depend on your credit history. If you are doubtful about getting any loan in the future because your CIBIL score is low, a gold loan is the one for you.
  2. Secondly, because they don’t depend on your income. In fact, you don’t need to have any income at all. All you need to have is gold worth minimum 18k of minimum 18 carats and you’ll be good to go. This makes it easier for many more of you to avail them
  3. A gold loan requires minimum documentation, as compared to a personal loan. This saves you from a long and tiresome hassle of keeping many documents in order. You don’t need income proof, just the basic KYC documents are needed.
  4. Gold loans offer a higher maximum loan amount than personal loans, as much as 5 crores.
  5. The processing fee is low
  6. The disbursal is faster, as less as 45 minutes.
  7. You have the liberty of choosing your own tenure, which might range from three months to two years.
  8. Lastly, they have easier and flexible repayment options. While personal loans or credit cards might cause you a huge financial burden during repayment, a gold loan is a better option. You can either repay through monthly EMIs, or through monthly interest rates and pay the principal in the end, or you can pay the entire amount in the end.

Gold Loan Interest Rates

The Starting gold loan interest rates for various banks are given below. However, these may increase depending on various factors such as your profile, the purity of your gold etc.

Gold loan interest rate

Gold loan Calculator

Gold Loan – The process

Gold Loan

All you have to do is take the gold along with the required documents to the banks. The disbursal amount is calculated by the banks on the basis of the gold’s purity. The higher the purity, the higher will be the loan amount offered to you. Some banks charge a separate fee for the valuation of the jewellery, along with loan processing fee.

It should be noted that gold bars might not be accepted as collateral by some banks, so it is always better to pledge your gold jewellery. While most banks offer a loan amount of up to 75% of the value of the pledged gold, some banks have increased this limit to 85% due to Covid-19.

Gold Loan – Be Careful

Here are some of the things that you watch out for while taking a gold loan:

  • First and most importantly, make sure you avail gold loans only from formal lenders such as banks and NBFCs as this will save you from fraud, such as stealth or misplacement of your entire collateral, or even replacing it with fake or impure gold.
  • Secondly, take care of your credibility. Covid-19 brings with it financial instability, choose a loan amount only when you know you will be able to repay it. A failure of repayment will make the banks liable to sell off your jewellery to recover their lost amount, and it will also affect your CIBIL score negatively.


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