Should you Sell Old Gold Jewelry or get a Loan for Emergency Funds?

By PolicyBazaar
  | Published: 02 December 2020 | Last Updated On: 02 February 2021

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People all around the globe have lots of gold with them in the form of coins, ornaments, and gold bars also. However, unfortunately, they don’t use it to their advantage. Most of the time, the glittery yellow ornaments they have been left idle collecting dust somewhere in the back of the cupboards, till the time a festival or wedding gives them a chance to show it off.

Most of the gold in the UAE is not monetized and the residents are not willing to sell their gold for money because of the sentimental value. But the good news is that selling old gold jewelry is not the only option for getting immediate liquidity.

When used properly, any gold amount could be helpful for you. While money lenders and pawnbrokers have been offering loans against your gold for years now, gold loans offered by leading financial institutions have become available for everybody in recent years. People are still not willing to say goodbye to their precious jewelry. They would rather fill up the application for a personal loan than using their gold ornaments as security for a certain amount of urgent cash.

Although both personal loans and gold loans work in a similar way, in reality, they are pretty different. Therefore, it comes as no surprise that a lot of people end up getting confused regarding the way these loans function and are unable to make a decision that which loan will be the best for them.

For all the people, gold is more than a simple investment. It involves an emotional connection too. This is clear from the meticulous selection of the metal and the handling of the jewelry.

However, while facing a cash crunch, the simplest solution obviously is gold. Keeping our sentiments in priority and holding on to the metal foolishly at that time will definitely not be a smart decision. While an average individual needs some amount of quick cash, they can generally consider taking a gold loan or selling old gold jewelry.

The businesses around us offer gold loans with various attractive offers as well. But when you have taken a gold loan, you remain in debt. Starting from that moment, you begin to worry regarding the rates of interest and the way to get your gold back by making repayment of the amount of loan.

Now, the question is why would you wish to put yourself in such frustrating conditions, which can continue for years? In a time of emergencies, you should think about selling old gold jewelry for meeting your financial requirements. Many jewelers purchase gold from you no matter the jeweler you had bought it from originally, and make payment of cash without wasting any time on the unnecessary formalities.

Obviously, the most attractive benefit, in this case, is the ready cash payment. The rumors say that some of the jewelers only make payment of the fair costs for gold, which was sold from their outlets. But the jewelers have been making payment of the best cost for your gold irrespective of where you purchased it from originally. The jewelers also make sure that the customers do not have to wait for longer durations for payments & that the whole procedure is pretty transparent.

You could see that this is the best for selling the gold to the jewelers such as these in case of financial emergencies, especially because prices of gold are at their all-time high currently. In the world market, gold prices have been rising. Even when you don’t need cash instantly, you can make use of this opportunity for selling old gold jewelry at an attractive rate and increase your savings.

The experts, in this case, stress the lameness of lamenting over the golden metal you sold for sailing across the financial emergencies. Whenever the financial stress is over and you can afford to purchase the gold again, you can definitely go ahead. You should consider the huge amount of interest that you would make payment of in case you take a gold loan. In comparison to this, the making cost on new and trendy jewelry pieces is not too huge.

If you don’t need cash instantly, but you wish to exchange the gold jewelry for trendy and new designs, this is a good time for the same. The gold that you had purchased years ago at small prices, can be sold at the double price now. This is the best time for exchanging the old gold for fresh pieces.

Now, that we have considered selling old jewelry and gold loans, then let us discuss, which is a better gold loan or personal loan.

Gold Loans

Rather than taking the stress of applying for personal loans, it is essential that you consider using gold, which is stored in your lockers also for availing of a gold loan. The processing duration of the loan is much faster, with the loans getting sanctioned almost instantly and the interest rate is much lesser than that of a personal loan.

The amount of loan is solely based on the value of the gold pledged and not the income you earn or your previous credit rating. The gold functions as the security for yourself as well as for the concerned bank. If you do not pay back the loan in the decided tenure, the bank will be auctioning off the gold for recovering the amount.

The repayment of the loan is also much easier because you have to option of opting for the payment of interest only for the loan tenure and make the repayment of the amount of principal whenever you want to close the loan and get back your gold. There are no charges involved for pre-payment also. Usually, gold loans offer you more freedom as opposed to personal loans.

Personal Loans

A huge number of residents in the UAE opt for a personal loan. The amount received on these loans can be utilized for making the payment of medical bills, funding your child’s education, helping in paying for your wedding, and many more situations. However, unfortunately, personal loans usually have a lengthy application process as opposed to gold loans and the rate of interest is also pretty high.

To apply for a personal loan, you will have to submit your proof of income as well as other documents that are asked by the concerned lender, and then also, there are chances that your loan does not get sanctioned. The previous credit rating is also considered carefully before deciding the loan amount that can be given to you. In case you do receive the amount of loan that you applied for, you will have to repay it in fixed EMIs or Equated Monthly Instalments, and you will not have the repayment flexibility in case of variable amounts.

Now, the question is if you should opt for a personal loan or not? Answering the following questions may help you find an answer to this question.

Do you have a decent credit score?

Is your job stable?

Do you have nothing as collateral?

Are all of your documents in order?

In case your answer to all the questions above is “Yes”, then personal loans could, hands down, be the best option in your favor.

After comparing the features of the gold loan and personal loan, it can be seen that gold loans offer more flexibility, whereas, personal loans are comparatively more complex. With more funds and easier repayment options, a gold loan can be a better choice. However, it totally depends on your financial condition and the situation at hand. Compare both the options and choose wisely.