The number of people taking gold loans in the country is increasing very fast. According to RBI, the total value of gold loans is now more than ₹1.7 lakh crore. Experts say that even though the interest rate is low, the risk is very high.
For many people, a gold loan looks like an easy option in times of need. They think that by pledging their jewellery, they can get money quickly and later take back the jewellery. But in reality, it is not that simple.
As per a report by Financial Express, the number of gold loans has almost doubled in recent years. RBI data says the total value has crossed ₹1.7 lakh crore. People are giving their jewellery as security at record levels because this loan is easily available. But it is important to know the truth. Many times, this loan can cause your family jewellery to be lost forever.
Why gold loan looks easy
People think gold loans are safe. The bank keeps jewellery as security, so the bank has no risk. You get money fast, and the interest is less than a personal loan. But this loan can become a trap.
How it becomes a trap
The interest is between 9% and 20%. At first, it looks cheap. But if you keep renewing the loan, the interest grows. Many people pay only the interest, but the main loan stays. When the loan ends, they have no money to take back the jewellery. Then they renew again or give more jewellery.
The bank never loses because it can sell your jewellery. But you lose your savings, wedding gold, or family gifts forever. Slowly, people get used to gold loans for every need. At the end, they have no jewellery left.
A gold loan is not always bad. It can help in real need. But it should be the last option, not a habit.