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| June 14, 2024

6 Reasons Why Opting for a Gold Loan than Selling Your Gold

Gold is a precious metal that is known to have a great sentimental value in Indian culture. Symbolising goddess Laxmi, it is a part of almost every auspicious occasion, like festivals, weddings, etc. In addition to this, gold is also considered a great investment option due to its constantly increasing market prices. An average Indian household keeps a major part of their savings in the form of gold ornaments.

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As gold is known for offering a lucrative ROI, one can make a good amount of profit in a short span of time. Apart from this, gold assets also serve as a great hedge against financial uncertainty. In times of need, one can either sell their gold assets or obtain a gold loan and quickly arrange the required amount of money.

However, individuals often face the dilemma of whether to pledge their gold ornaments to obtain a loan or sell them to arrange the funds. Given the inevitable attachment of Indians to their gold assets, applying for a gold loan definitely seems like a better option.

Reasons Why Obtaining a Loan is Better

When you apply for a gold loan, you pledge your gold ornaments against a specific amount of money for a pre-defined period. This is a type of secured loan, and these ornaments work as collateral. Once the loan is paid, you can easily claim your pledged ornaments. Here are a few reasons why taking out a gold loan is a better choice as compared to selling your assets:

Secured Ownership

One of the biggest benefits of gold loans is that the ownership of your gold ornaments remains intact. Since you are pledging your assets for a certain duration, you can reclaim them as soon as the entire loan amount (including interest) gets paid. Selling gold, on the other hand, requires you to transfer ownership of your assets. Once the transaction is done, you'll not have any kind of claim over those ornaments.

Better Convenience

Another good thing about gold loans is the amount of convenience they offer. As compared to selling gold ornaments, pledging them to take out a loan is a lot easier. With this option, you don't have to go through the hassle of finding a buyer. There are a number of lending institutions that offer instant loans against gold assets.

Suggested Read: A Beginner's Guide To Gold Loans In India

No Impact on Long-term Profit

Gold is a popular investment option due to the higher ROI it offers. There can be instances when you end up selling your ornaments at a much lower price than expected. But in the case of a gold loan, you get access to funds at a nominal charge (loan interest). Since you retain ownership of your assets, you can sell them later at your convenience.

Quick Access to Funds

Selling gold can be a little time-consuming, especially when you want to get a good value for your assets. Gold loans, on the other hand, can be a quicker option to arrange funds. Since the loan-to-value ratio of these loans is high, you can arrange a large sum against your gold ornaments.

Avoid Price Fluctuations

The market rate of gold experiences fluctuations from time to time. When you choose to sell gold, these fluctuations can significantly affect the amount you get in return for your ornaments. But while opting for a gold loan, you don't have to worry much about these fluctuations. All you need to do is, check the gold loan rate today, and you will get an idea of the amount you can avail.

No Capital Gain Tax

When you sell any kind of gold asset (bar, coin, or jewellery), you need to pay capital gain tax on the profit you've made. If you have held those ornaments for more than 3 years, then the profit will be considered long-term. And if the duration is less than that, you'll have to pay short-term capital gain tax. But this is not the case with gold loans. When you pledge your assets to obtain funds, you don't have to pay anything except for a nominal processing fee.

Are you also planning to take a gold loan on easy EMIs to take care of a temporary cash crunch or invest in a new business venture? If yes, then you can choose from various loan schemes offered by Muthoot Finance. We offer quick and hassle-free gold loans at highly competitive interest rates. You can explore all the options online and then make a choice. Or, visit your nearest Muthoot Finance branch to know more.

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