Consumer Voice - - Gold Loans -

Higher in­ter­est rate: Gold loan sanc­tioned by NBFCs is high in in­ter­est rates, though in mat­ters of sim­ple doc­u­men­ta­tion and quick­ness in sanc­tion­ing the gold loan, they are match­less.

Dif­fi­cult to close: Once taken, it is dif­fi­cult to close. Re­search in­di­cates that it be­comes more of a habit to take more such loans with­out think­ing of repaying the loans taken and pay­ment of monthly in­ter­est charged.

En­cour­ag­ing crime: There are news re­ports that gold ac­quired by spu­ri­ous means (chain­snatch­ing, theft, etc.) of­ten lands as se­cu­rity for gold loan. Bor­row­ers in­volved never re­pay as they van­ish with loan amount, with­out both­er­ing about the de­posited gold.

Un­reg­u­lated mar­ket: An un­reg­u­lated mar­ket and easy sanc­tion of such gold loans has seen many NBFCs mush­room­ing with the sole pur­pose of giv­ing gold loans and run away af­ter col­lect­ing enough gold.

Low value of studded jew­ellery: Jew­ellery studded with pre­cious stones (like di­a­monds, emer­alds), which are usu­ally of higher value than pure-gold or­na­ments, do not get their real value from NBFCs or banks. They will deduct the weight of such stones to ar­rive at the pu­rity of the gold ten­dered for gold loan. It is es­ti­mated that each carat of stone is equal to about six grams of gold – hence a damp­ener for the ones who have to pledge studded jew­ellery.

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