5 Common Gold Loan Myths and Facts Behind Them
11 April, 2025
Synopsis
As the popularity of Gold Loans grows, so do the myths surrounding them, which can cloud your judgement. It is important to understand the facts behind them to make informed decisions.
Some of the common Gold Loan myths include high interest rate a good credit score requirement for approval, and the application process being tedious.
Other myths revolve around the lenders being only traditional jewelers, the use of the Gold Loan amount, and the amount sanctioned.
Due to convenience, Gold Loans have become a sought-after option for borrowing money. However, as the popularity grows, so do the myths surrounding the loan. Falling prey to such misconceptions can deter you from leveraging the potential of this financial tool. Such myths are often born out of misinformation or outdated notions. Find some of the common Gold Loan myths debunked in this article to help you make informed decisions while applying for the loan.
5 Common Gold Loan Myths and Facts Behind Them
Here are some of the popular gold loan myths debunked:
Myth: Gold Loans Have a High Interest Rate
Fact: One of the most common Gold Loan myths is that they come with hefty interest rates. In contrast, gold loans come with attractive interest rates. As you pledge gold as collateral, you reduce the risk for lenders. They can claim the loss of your default by liquidating your gold jewellery, Hence, they offer low interest rates.
Myth: You May Lose Your Gold
Fact: As Gold Loans are secured in nature, there is a risk of losing your gold jewellery if you cannot clear the dues. While this is true, it is the last resort lenders opt for. Hence, the myth does not hold true. In reality, you are given ample time and multiple reminders to repay the loan amount. Also, you can choose the repayment mode you are comfortable with to avoid defaults.
Myth: A Good Credit Score is a Requirement
Fact: Unlike traditional loans, Gold Loan lenders focus on the value of the gold and your income stability as the main criteria to sanction loans. Hence, credit score is not the main determinant for approval. So, you can confidently apply even with a low credit score and use this loan as a medium to improve your score.
Myth: The Application Process is Tedious and Lengthy
Fact: Contrary to another common misconception, Gold Loans are easy to avail. The application process is simplified with minimal details and documentation. Most banks and institutions also let you apply online and disburse funds within minutes. Thus, the process is convenient and saves time.
Myth: Only Traditional Jewellers Offer Gold Loans
Fact: For the longest time, the concept of pledging gold to borrow funds has been associated with jewellers. They are a go-to avenue for this purpose. However, many leading banks and Non-banking Financial Companies (NBFCs) provide Gold Loans through a systematic process and transparent terms. They follow RBI-mandated guidelines, which makes them a safe source.
Myth: Gold Loan is Only Meant for Financing Emergencies
Fact: Seeking a gold loan is often considered the last resort. This old-time Gold Loan myth limits you as a borrower. You are unable to make optimal use of your gold jewellery with this approach. In reality, you can put your gold possessions to good use without losing ownership through Gold Loans.
Myth: Small Amount is Sanctioned on Gold Loan
Fact: You may not expect to get much against the gold ornaments you pledge. However, the loan amount depends on the value of your gold. It is determined based on the purity and weight of the gold. Hence, it can range anywhere between a few thousand to several lakhs, depending on the lender.
Make the Most of Your Gold with HDFC Bank Gold Loan
Gold Loans are a convenient way to access funds quickly, but Gold Loan myths can misguide you into thinking otherwise. Don't let them stop you from unlocking the complete potential of your gold jewellery. Consider the myths debunked in this article to make well-informed decisions and tap into the benefits of this financial solution without hesitation. If you are ready to make the move, HDFC Bank Gold Loan is the right choice. The seamless and transparent process lets you access funds against your gold without any hassle.
FAQs
Do I need to have a bank account to avail of a Gold Loan?
Yes, as the funds are disbursed to your bank account, most banks and financial institutions require you to have one.
What are the new rules for Gold Loans?
RBI has issued new rules for Gold Loans that direct lenders to thoroughly review their policies and identify them. Expanding on this, it also focuses on eradicating irregular practices by imposing control on third-party and outsourced service providers.
Can I avail of multiple Gold Loans simultaneously?
Yes, you can avail of multiple Gold Loans from different lenders, subject to pledging separate gold jewellery for each loan.
Apply for Gold Loan online
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Gold Loan at the sole discretion of HDFC Bank Limited. Loan disbursal is subject to documentation and verification as per Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
