Why Isn't Taking a Gold Loan From Local Jewellers an Option?

Taking out a jewel loan from a local jeweller might seem like a good idea. After all, they already have the gold, and they're probably willing to give you a good loan. However, there are several reasons why this isn't a good option. 

They typically charge high-interest rates and fees. Finally, they usually require collateral, which means you could lose your gold if you can't repay the loan. For these reasons, it's generally best to avoid taking out a gold loan from a local jeweller.

Reasons Why it is not a good option to take a gold loan from local jewellers

1. Local jewellers do not report to any credit bureau. This means that taking a gold loan from a local jeweller will not help you improve your credit score.

2. The interest rates offered by local jewellers for gold loans are exorbitantly high. The interest rate can be as high as 24% per annum in some cases.

3. There is no transparency in the pricing of gold by local jewellers. They might quote a lower price when you are taking the loan and a higher price when repaying the loan. This can result in you paying more than the actual value of your gold.

4. Local jewellers do not offer any flexible Gold Loan repayment options. You will have to repay the entire loan amount within a short period, usually 3 to 6 months.

5. There is no security or collateral involved when you take a gold loan from a local jeweller. This means that if you cannot repay the loan, the jeweller can take away your gold without any repercussions.

6. There is no customer protection when you deal with local jewellers. If you have any problems or issues with the loan, you will not have anyone to turn to for help or assistance.

Finally, it is always better to deal with a reputable jewel loan provider such as banks or NBFCs rather than local jewellers. 

Almost all banks and NBFCs provide gold loan online payment systems.

Read Also: Top 5 Gold Loan Companies in India