Top 5 situations where a gold loan can help you | The Financial Express

Top 5 situations where a gold loan can help you

Despite a meticulous financial plan, situations may turn so adverse, or an opportunity becomes so lucrative, that a person may be compelled to take a loan.

Top 5 situations where a gold loan can help you
Gold loan is one of such loans that allows you to get a loan at a cheaper rate by mortgaging the gold kept idle at your home.

The best way to manage your finances is by staying debt free, unless it is for enhancing your earning capacity – like for acquiring a professional degree or for enhancing production capacity; and for acquiring a capital asset that would reduce current expenses and appreciate in value over time – like for buying a house to save rent.

However, despite a meticulous financial plan, situations may turn so adverse, or an opportunity becomes so lucrative, that a person may be compelled to take a loan.

Out of the loans available in the market, secured loans are generally cheaper than unsecured loans and are easier to avail.

Gold loan is one of such loans that allows you to get a loan at a cheaper rate by mortgaging the gold kept idle at your home.

Ravish Gupta, Business Head – Gold Loan, Capri Global Capital Ltd lists some of the purposes for which gold loans make a better sense:

1. Business Expansion

As discussed, loans may be taken for enhancing your earning capacity. So, for increasing your production capacity and to meet your working capital needs to keep productions running, you may take loans, provided the rate of interest is not more than the return the loan would help you generate.

To keep the rate of interest down, it’s better to put the idle gold in use to get a gold loan at a cheaper rate.

2. Educational Requirements

Education is one of the said purposes that would enhance your employability and increase your chance of getting a high-salary job on better terms and conditions. In case you fail to secure a good education loan, a gold loan would be the best alternative to get one at an affordable rate.

3. Healthcare

Despite having health insurance cover and emergency fund, a serious illness or major accident may put all the financial plans haywire. In such a situation, to manage the excess treatment cost, instead of taking an expensive loan and paying high EMI, it will be better to take a gold loan, if possible.

4. Wedding

The ritual of tying a nuptial knot in India is generally very expensive and termed as “big fat Indian wedding” with days of celebrations in different phases. While close relatives generally pitch in by making some contributions, one may still need to arrange funds if no long-term plannings were done beforehand. In such a situation, apart from handing over gold jewelleries to the bride, some of the unused gold may be mortgaged to secure a gold loan.

5. Vacation

While it may be avoided, going for a vacation tour to an exotic destination – for honeymoon or for a relaxed holiday – may be a too lucrative dream to avoid, despite the fact that it may cost a fortune. To avoid the burden of a costly EMI, after paying high expenses like flight costs and hotel stay, it would be better to take a gold loan, if the entire tour expenses can’t be paid out of pocket.

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First published on: 10-10-2022 at 19:03 IST