How Does a Gold Loan Work?

gold loan

A time may come when you will need cash urgently to pay for something. You can ask for help from friends and family or you can apply for a loan from a financial institution. The fastest way of getting that much-needed cash loan is through a personal loan or a gold loan. There are advantages and disadvantages attached to both types of loans, but of course, you need gold to even consider a loan against gold jewellery, to begin with.

What is a Personal Loan?

A personal loan can be regarded as an unsecured loan. These types of loans are easily available and the speed at which they are disbursed. You can apply for personal loans online. You do not have to provide any collateral or a guarantee that you will be fulfil the repayment terms of the loan.  

What is a gold loan?

A gold loan is a type of loan which is granted by keeping your gold as collateral. It is usually a short term loan. You can get a gold loan from some financial institutions if you have invested in gold bullion or you can get a loan from a gold buyer or pawn shop if you have some valuable gold jewellery. This is a kind of secure loan that is paid out quickly.

The advantages of getting a loan against gold jewellery

  • Gold loans are a convenient way to raise money for a short term.
  • Choosing a secured loan like a gold loan and using your gold as collateral means you don’t have to lose any of it. The gold still belongs to you. You need to pay the loan back within the specified repayment period or you will lose it.
  • If you sold your jewellery to a second-hand jewellery dealer or a pawn shop, you would spend more money to replace it with a similar piece of jewellery. A gold loan helps you get the cash you need without losing your precious gold jewellery.
  • Gold loans are simple to obtain. You can walk into a gold shop with your jewellery and have it appraised and walk out with the cash you need. You can also apply for a gold loan online.

How does a gold loan work?

  • You need to find a gold buyer or pawn shop that offers gold loans. You can find one in Brisbane or you can search for one online.
  • The dealer will establish the value of the gold at current spot prices. If you are using jewellery with diamonds and gemstones, these will be included in the final appraisal.
  • The buyer will then make an offer based on the appraisal value.
  • When you and the buyer come to an agreement over the price, a contract detailing interest and service fees will be drawn up for you to sign.
  • The gold is then placed in a secured place and you are given a receipt you will need to produce when you come back to reclaim your gold at the end of the loan period.
  • You get the cash immediately. No, hassle no fuss and no credit checks.
  • Most gold loans are required to be repaid within 30 days. You can repay the loan plus finance fees in one large sum or you can extend the loan period by paying the finance fees.

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