Benefits of Taking a Personal Loan for Buying Gold

Gold holds immense cultural and religious significance in India, symbolising wealth, prosperity, and security. Weddings alone account for approximately 50% of annual gold demand in the country.

A personal loan can be a practical option to acquire this precious metal without draining your savings. 

This article explores the benefits of this loan option and explains how to finance gold purchases with a personal loan.

Benefits of Personal Loans for Purchasing Gold

Buying gold with the help of personal loans can potentially be a wise decision. Here’s why:

• No Collateral Requirement: Unlike gold loans, personal loans for purchasing gold do not require collateral. This makes personal loans a more accessible option for individuals without valuable assets to offer as security.
• Larger Loan Amounts: Personal loans can offer substantial loan amounts of up to INR 30 lakhs*, making them a suitable option for high-ticket purchases such as gold. 
• No Restrictions on Loan Use: One of the key advantages of personal loans is that they come with no restrictions on the end use of the funds. Borrowers can use the loan to purchase gold without needing to meet specific conditions or justify their purchase, unlike loans that limit the use of funds to a particular purpose. Any leftover funds can also be used for other expenses.
• Quick Fund Access: Personal loans usually come with quick approval processes, providing timely access to funds when necessary. In the case of gold, when market conditions and seasonal demands make it an ideal time to buy, personal loans can help secure quick financing. Individuals can capitalise on favourable timing without waiting for lengthy approval processes or market shifts.
• Preserving Existing Savings: By using a personal loan for purchasing gold, borrowers can preserve their savings for other pressing expenses or investments. This is especially beneficial during high-expense periods like festive seasons, where liquidity is important. Personal loans allow individuals to buy gold without exhausting emergency funds or savings.
• Potential Credit Score Boost: Responsible use of the loan, including timely repayment, can positively impact a borrower’s credit score. Over time, this can improve their creditworthiness and borrowing capacity for future financial needs.
• Gold Investment with Flexible Repayments: Gold is considered a relatively safer investment, particularly in times of economic uncertainty. You can use personal loans to buy gold as an investment, allowing you to take advantage of its potential price appreciation. With flexible repayment terms, you can spread the cost of the investment over a longer period, easing financial pressure and enabling you to invest in gold without draining your savings or impacting your immediate cash flow.

How to Apply for a Personal Loan to Buy Gold?

Here are the steps to follow when applying for a personal loan:

1. Compare Different Lenders 

When applying for a personal loan, it’s important to compare offers from different lenders. Keep in mind not only the interest rates but also additional fees and charges such as processing fees, prepayment penalties, or late payment charges. This is crucial as these charges affect the overall loan cost.

2. Check Eligibility Criteria

Eligibility criteria vary from one lender to another, so it’s essential to check each lender's specific requirements. Factors such as age, income, credit score, and work experience affect your eligibility. Make sure you meet these conditions to increase your chances of approval.

3. Prepare the Necessary Documents

Before applying, ensure you have all the necessary documents ready. Common requirements include proof of identity, proof of address, and proof of income. Having your documents in order will speed up the application process.

4. Calculate Your EMI

An EMI calculator is a convenient tool to estimate your monthly repayment. By factoring in the loan amount, interest rate, and tenure, you can calculate the EMI amount. This will help you make an informed decision about how much you can comfortably borrow based on your financial situation.

5. Fill Out the Application Form

Once you're ready to apply, you'll need to fill out the loan application form, either online or by visiting the lender’s branch. Typically, you'll need to provide personal details, income information, and employment status. Be sure to enter accurate information to avoid delays or complications.

6. Wait for Loan Approval

After submitting your application, it will undergo processing. A lender representative may contact you for additional information. Once all the checks are successfully completed and you have reviewed and signed the loan agreement, the approved amount will be disbursed.

Conclusion

A personal loan for purchasing gold can be a smart financial decision when planned carefully. Borrowers benefit from no collateral requirements, substantial loan amounts, and flexible repayment tenures, making it easier to invest in gold without depleting their savings.

Ready to take the next step? SMFG India Credit offers personal loans of up to INR 30 lakhs*, with competitive interest rates starting from 13%* per annum and flexible tenures ranging from 12 to 60 months*.

Apply online today to take advantage of a hassle-free application process requiring minimal documentation.