Gold Loan vs Selling Gold: Which Option Actually Pays More?
Interest compounds. Prices fluctuate. We break down the real maths on both options so you can make an informed decision.
Both options put cash in your hand today. The question is which one leaves you better off in six months. The answer depends on two things: how long you need the money, and which direction gold prices move.
How a gold loan works
You pledge your jewellery with a bank, NBFC or pawnbroker. They lend you 75–85% of the assessed value (the LTV ratio is regulated by RBI). You pay interest monthly, and when you repay the principal plus all accumulated interest, you get your gold back.
Gold loan interest rates typically range from 9% to 24% per annum depending on the lender. An NBFC that advertises low monthly rates often has annualised rates well above 18%.
The compounding problem
Most borrowers underestimate how quickly interest accumulates. On a ₹1 lakh loan at 18% per annum for 12 months, you pay back ₹1,18,000. At 24% it is ₹1,24,000. If you miss a payment, penalties add further. Meanwhile the lender holds gold worth ₹1.25 lakhs — they are well protected.
| Scenario | Gold loan (18% p.a.) | Sold outright |
|---|---|---|
| Cash in hand today | ₹1,00,000 (80% LTV) | ₹1,25,000 (full value) |
| Cost after 6 months | ₹9,000 interest | ₹0 |
| Cost after 12 months | ₹18,000 interest | ₹0 |
| If gold price rises 10% | You benefit on redemption | You miss the upside |
| If gold price falls 10% | You still owe full amount | You already sold at higher price |
When a gold loan makes sense
- You have a short, defined need (under 3 months) and a clear repayment plan
- You believe gold prices will rise significantly before you repay
- The jewellery has high sentimental value you cannot replace
- You qualify for a low-interest loan (under 12% p.a.) from a public sector bank
When selling outright makes more sense
- You need cash for more than 6 months
- The interest cost will exceed 10% of the jewellery value
- Gold prices are at or near recent highs
- You have gold that is broken, old-fashioned or unlikely to be missed
EasyGoldBuyer also offers pledged gold release — we pay off your existing loan, take delivery of the gold, and pay you the difference. This is useful if you are stuck in a high-interest loan and want to exit cleanly.
Got gold to sell?
We come to you.
Doorstep visit, XRF tested in front of you, paid at the live rate — in Noida and Greater Noida.