Dhanteras is the start of the five-day Diwali festival. It is a special day for buying items, especially gold and silver. Buying these metals is seen as lucky because they represent wealth and prosperity. However, as you know prices for gold and silver go up during this time, and not everyone can afford to pay a lot of money at once. This is where loans can help, making it easier to buy gold or silver without stressing your finances. If you want to buy gold or silver this Dhanteras but need financial help, it’s important to choose the right loan. Let’s discuss this here.
Gold price today (23/10/2024) is around 7,800/gram
There are several loan types you can consider when purchasing gold or silver this Dhanteras. Each loan option comes with its own benefits, interest rates, and repayment terms. Let’s break them down:
The best part of a personal loan is that you can use it for anything even buying gold and it’s an unsecured loan. Personal loans are popular because they don’t require collateral and have flexible repayment terms.
Loan amount: Up to 40 lakhs
Interest rates: Starting from 10.50%
Repayment tenure: Usually between 1 to 5 years.
No collateral: As this is an unsecured loan, you don’t have to pledge any assets.
Tip: Personal loans are great if you don’t want to risk pledging your gold or other assets, but they usually come with higher interest rates compared to secured loans.
In this case, you pledge your existing gold as collateral and get a loan amount based on the value of the gold.
Loan amount: Up to 75% of the market value of the gold you pledge.
Interest rates: Starting from 8% p.a
Repayment tenure: Ranges from 3 months to 24 months.
Collateral required: You need to pledge your gold as collateral to secure the loan.
Tip: Gold loans are great if you already have gold and need money to buy more or other precious metals like silver. The interest rates are usually lower than those of personal loans.
Many credit cards let you turn your purchases into monthly payments called EMIs. If you have a high credit limit, you can use your card to buy gold or silver and pay it back in installments over a set time.
Loan amount: Dependent on your credit card limit.
Repayment tenure: Ranges from 3 to 24 months, depending on the credit card provider.
No collateral: Like personal loans, credit card EMIs don’t require collateral.
Tip: If your credit card has a high limit and your jeweller takes credit card payments, using EMI conversion can be an easy and fast way to pay for your Dhanteras purchase.
Some banks offer consumer durable loans that you can use to buy gold and silver. These loans are made for big purchases during festive times and often have no or low-interest monthly payments.
Loan amount: Ranges from INR 50,000 to INR 5 lakhs, depending on the financial institution.
Interest rates: Some lenders offer zero-interest loans, while others may charge 12% to 22%.
Repayment tenure: Typically ranges from 8 to 36 months.
No collateral: These are unsecured loans, so no collateral is required.
Tip: Consumer durable loans are a good choice if you want no-interest monthly payments for your gold or silver purchase. Just be sure to check for any hidden charges, like processing fees.
With multiple loan options available, how do you decide which one is best for you? Here are some factors to consider when choosing the right loan for your Dhanteras gold or silver purchase:
Before taking any loan, it’s important to assess your current financial situation. Ask yourself:
Can you afford to repay the loan within the specified tenure?
Do you have existing debts or loans that could impact your repayment capacity?
Is the interest rate manageable for your budget?
Tip: Always ensure that your monthly EMIs are less than 40% of your monthly income to avoid financial strain.
Interest rates can vary significantly between different loan types and lenders. It’s very important to compare the rates before deciding.
Personal loans usually have higher interest rates compared to gold loans.
Gold loans offer lower interest rates but require you to pledge your existing gold.
Credit card EMIs are convenient but may come with higher interest rates than personal or gold loans.
Tip: Even a small difference in interest rates can significantly impact your total repayment. Use online loan calculators to compare the total cost of the loan.
Apart from the interest rate, you should also look for any hidden fees such as:
Processing fees: Some lenders charge 1% to 2% of the loan amount as processing fees.
Prepayment penalties: If you plan to repay the loan early, check if the lender charges a penalty for prepayment.
Late payment fees: Ensure you understand the penalties for missing an EMI payment.
The loan tenure affects both your EMI amount and the total interest you pay over time. Here’s how to choose the right tenure:
Shorter tenure: This means higher EMIs but lower total interest paid.
Longer tenure: This offers lower EMIs but increases the total interest paid over time.
Tip: If your cash flow is tight, choose a longer tenure with lower EMIs. However, if you can afford higher EMIs, a shorter tenure will save you money on interest.
If you have gold and are okay with using it as security, a gold loan might be the cheapest option. If you don’t have anything to use as security, a personal loan or credit card EMI would be better, but they usually have higher interest rates.
Tip: If you don’t want to use your assets as security, choose an unsecured loan like a personal loan or a consumer durable loan.
Choosing the right loan for gold and silver purchases this Dhanteras can help you enjoy the festive season without straining your finances. Whether you opt for a personal loan, a gold loan, or another option, make sure to compare terms and choose what fits your needs best.
You can use gold loans, personal loans, credit card EMIs, or consumer durable loans to purchase gold and silver.
A gold loan allows you to borrow money by using your gold as collateral. The loan amount is based on the value of the gold you pledge.
If you have gold to pledge, a gold loan may offer lower interest rates. If not, a personal loan might be a better choice, though it usually has higher rates.
Look for interest rates, processing fees, repayment terms, and any hidden charges before deciding on a loan.
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