De-bunking Common Gold Loan Myths

Posted in Gold Loan Articles By Sajhyadri Chattopadhyay-
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For centuries, Indians have invested a fair portion of their wealth in gold-based assets like ornaments, bonds, and other related investments. Furthermore, people can avail a loan against the gold they have amassed over the years. Some online apps and web-based platforms offer the convenience of purchasing bite-sized bits of gold. Unfortunately, this momentary confusion is susceptible to misinformation, due to which potential borrowers have been led astray from the true benefits of gold loans. 

6 Myths on Gold Loans Debunked

Why believe ill-informed facts about gold loans? If you’ve been contemplating applying for a gold loan, then this is information you sorely need – 

“The gold could be misplaced!” 

Some people believe that there’s a strong possibility that it will be misplaced or sold. However, gold loan lenders follow strict safety measures to ensure that these pledged assets are not used for illicit activities or auctioned off. To avoid such incidents, it’s strongly advised that borrowers only engage with government-approved financial institutions like banks or NBFCs. 

Here, your gold will be kept in secure vaults and are secured by insurance against any accidental damages or theft. Moreover, some gold loan lenders offer services wherein their representatives directly visit the borrower’s registered address for collection. Also, they carry a karat meter for gold appraisal to verify the quality of the asset. 

“Gold loan lenders charge hefty interest rates!” 

Some might dissuade borrowers by falsely claiming that gold loans levy high-interest rates. Once more, that’s not the case. Most gold loan lenders offer reasonable interest rates in comparison to unsecured credit. The interest levied on gold loans can also depends on factors like a borrower’s credit score, income profile, repayment tenure, and the lender chosen. 

For example, on Bajaj Markets, you can get a gold loan at interest rates starting from as low as 8.88%. Additionally, there are various criteria that estimate the interest rate levied on the loan. Some of these include gold purity, the loan amount requested, present inflation crisis in the market, the value of the gold, and repayment capacity. 

“You can only avail gold loans from jewellers!”

Those still holding onto old, traditional beliefs might try to spew outdated information like this, but it’s not correct. While gold jewellers can approve certain gold loans, there are other alternative providers like banks and NBFCs who offer borrowers the guarantee of security for their pledged gold. In India, there are organised and unorganised gold loan sectors. 

However, the latter has a wider market share, although with its set of risks. Informal lenders might charge unreasonably high-interest rates and rarely offer any security. Moreover, with technological advancements and the increased occurrence of digital gold loans, where the whole process place digitally. Lending executives come to your house, value your gold, and get the amount sanctioned within the hour. 

“If the market value of gold drops, you will have to pay more!”

One prevailing misconception about gold loans involves the fear of loss if the price of gold decreases. Let's clarify why this is false. As gold loans are secured loans, a lender's focus is on the quality of the gold itself rather than its cash value. Therefore, if the market value of gold drops, borrowers are not obliged to repay any extra amount. 

The calculation of the gold loan rate per gram considers the market value of a certain purity of gold at the time of borrowing. Once the gold has been approved and pledged and your loan amount has been sanctioned according to the LTV ratio, the repayment sum will not change even if the market value of gold changes. 

“It’s a long and tedious application process” 

While searching for quick sources of funds, it’s easy for borrowers to be discouraged at the thought of multi-step processes. With their desperation clouding these decisions, it’s crucial to clear the air around this misconception. Gold loans are disbursed quickly once the verification and valuation of the pledged item are complete. 

Ideally, it’s one of the quickest ways for one to avail funds without selling off their investments. They require minimal documents such as ID proof and address proof and have simple eligibility criteria. Thanks to the 100% online process, your application gets reviewed and approved easily. Also, the doorstep services provided by some lenders can further expedite the loan process. 

“Only certain types of jewellery qualify for gold loans!” 

Investors could have amassed their gold portfolio through investments and gifts. These yellow metal assets could be in the form of ornaments, but some people might have them believe that certain lenders have standards for the jewellery they accept. Often, people usually hold a misconception that old or antique jewellery cannot be pledged for gold loans. 

This is false as there are no government-issued guidelines that mentions anything about the age of gold to be pledged. In reality, borrowers can avail a loan against gold jewellery as long as it falls within a karatage of 18-24 karats. Hence, try to pledge assets of this quality for a higher LTV. 


With these myths busted, aren’t you relieved that you can now choose such a useful financial tool for any kind of urgent fund requirement? After all, they’re ideal for financing requirements like educational fees, weddings, etc. Simply hop on over to Bajaj Markets and apply for a hassle-free gold loan at up to 75% the value of your gold! With benefits like part-release facilities, complimentary insurance, and doorstep services, availing a gold loan couldn’t be easier! 

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