July 19, 2024

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Reasons why going with cash against gold is a better option than a gold loan?

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cash against gold

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Gold is not just a precious metal or investment, it’s more than that. Everyone has a sentimental connection with Aurum. However, when there’s a financial crisis during their lifetime, the first thing that comes to their minds is getting cash against gold or a gold loan. No one even wants to think about selling gold for cash due to the emotional connection. But, considering cash for gold is far better than availing gold loan. If you’re wondering how it’s a better option, then read the blog post till the end.

SELLING GOLD VS GOLD LOAN

First of all, you need to understand the difference between both these options. In the case of a gold loan, you keep your gold items with a gold loan company as collateral. In turn, the lender will give you the loan amount. You can get your gold back after repayment of the principal and interest amount in full. On the other hand, you sell gold for cash to an online gold buyer. Here, you cannot recover your gold back.

Now here’s why cash for gold is better than a gold loan:

  • Interest Rate

The interest rate on the gold loan is the first reason why selling gold for cash is a better option. Although, many companies are giving gold loans at a lower interest rate but it’s an additional expense that you incur during repayment.

This is not the case when you cash your gold via selling. The gold buyer will take your gold and give you the best cash for gold. Some people will say that selling includes deduction of making charges and more but you don’t have to at least pay interest every month on that money.

  • Repayment of Loan

When you take a gold loan, you have a headache of repayment every month in the form of EMIs. This creates financial as well as mental pressure. Sometimes, you fall short on funds and it’s hard to arrange money for gold loan EMI. In this case, selling gold makes sense as you are exchanging cash for gold. There is no repayment burden on you. Yes, it’s understood that you lose on your gold permanently. However, you can always purchase it again when your financial condition becomes better. At least, no additional expense gets added to your monthly expenditure in the form of gold loan EMI.

  • Gold Forfeiting Risk

People don’t sell gold due to the fear of losing their precious metal pieces. However, if you have taken a gold loan and could not be able to repay it back in full then also you have to lose it. This is because the gold loan company will forfeit your gold to recover their loan amount. Eventually, the consequence will be the same. So, why not sell your gold for cash and enjoy peace of mind.

These reasons make cash against gold by selling a smarter option than a gold loan.

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