Using a Personal Loan to buy gold: What you should know this festive season

With Diwali just around the corner, celebrations call for shopping to your heart’s content and bringing in the festival of lights in full swing. Among other purchases, the occasion of Dhanteras is incomplete without buying gold to invite wealth and prosperity. But the soaring gold prices may make it challenging. Worry not! Your festive spirit can be revived with the help of a Personal Loan.

Learn how this festive loan helps you buy gold and whether you should opt for it in this blog. 

Buying gold with a personal loan
 

Buying gold using a personal loan is more common than you would think. This loan makes for an apt festive loan as it is not tied to a specific purpose. You can use it for funding your Diwali shopping, gifting loved ones, and even buying gold this Dhanteras.

Applying for this type of online gold loan involves a straightforward process. You can easily apply online with simple eligibility criteria and minimal documentation. Once approved, the sanctioned amount is credited directly to your bank account.

In short, a personal loan is a festive loan that financially assists you to celebrate big with your loved ones.

Pros and cons of using a personal loan to buy gold
 

A personal loan is a good online gold loan option to reduce the financial burden of purchasing gold this festive season. But like any financial product, it comes with pros and cons worth exploring.

Pros:

· No collateral requirement: Since personal loans are unsecured, you need not pledge collateral to get funds, as you would with an online gold loan.

· Quick disbursal: You can opt for instant personal loans that are disbursed on the same day, within a few hours, subject to you meeting the eligibility criteria.

· Flexible repayment: You can choose a repayment plan that suits your monthly budget and flexibility. The EMI is adjustable, and so is the tenure, based on what works for you.

· Digital convenience: From application to approval, the entire process of getting this festive loan is completed online from the comfort of your home.

· Multi-purpose loan: As stated earlier, there are no restrictions on how you use the funds with a Personal loan. You can use it to buy gold and fulfil other shopping urges this Diwali.

Cons:

· Comes with interest rates: Personal loans like any other loan come with an interest factor which needs to be considered before using it to buy gold.

· Risk of overborrowing: The easy access to a festive loan may tempt you to borrow more than you need or can repay, leading to unnecessary debt.

· Impact of default: If you end up delaying or missing your EMIs, your credit score takes a hit and affects your future credit prospects.

What to check before applying for a personal loan
 

It’s important to go in with your eyes open with the application process for this festive loan. While the process is easy and favours your need for quick funds, take the time to look into these aspects to make an informed decision:

· Lender policies
 

Lenders have specific policies concerning their eligibility criteria, loan amount, approval timelines, and documentation process. Some may be more flexible and forgiving than others. Some may have special offers for the festive season, while others don’t. It’s good to compare them to choose a lender that matches your needs.

· Interest rates & charges
 

The interest rate directly impacts your monthly EMIs and total loan cost. Beyond the interest component, lenders may impose additional charges, like processing fees, late payment penalties, EMI bounce fee, prepayment, and foreclosure charges. This looks different for each lender. Looking into these charges is crucial to having a realistic view of the personal loan cost.

IDFC FIRST Bank personal loan for festive shopping starts at just 9.99% p.a.

· Repayment terms
 

You enjoy the flexibility to choose the EMI and tenure for a personal loan to suit your financial situation and comfort level. Take this opportunity to make your move cautiously. While a longer tenure seems sensible, it increases your total interest. A shorter tenure may strain your finances, but if your income allows, this is the best way to go debt-free faster with a reduced interest burden. Pick what balances cost and comfort for you.

· Fine print
 

Being aware with the details, especially with financial products is essential. So, make it a priority to go through the loan agreement thoroughly and any other crucial information you find on the lender’s website. You can decode any hidden fees, penalty triggers, rate fluctuations, and other limitations. Understanding them upfront avoids any misunderstandings later.

· Your financial readiness
 

Sure, you want to celebrate Diwali to the fullest, and buying gold with a personal loan seems practical. But it is also a financial responsibility. What you borrow today has to be repaid tomorrow. So, consider your affordability before making the decision. Use an Personal Loan EMI calculator to check if your monthly cash flow can handle EMIs. You want to be able to repay comfortably.

Tips to reduce interest cost on the festive loan
 

Being smart with your personal loan application involves reducing the interest cost as much as possible. Here are some tips to guide you:

· Assess financial requirements: If your financial situation permits, go for a shorter tenure to clear the loan faster and pay less interest overall.

· Compare festive offers: Personal loan becomes a festive loan on occasions like Diwali. Compare such festive offers to see how you can lower the interest burden.

· Keep credit score in check: Maintain a strong credit score, typically higher than 750, to negotiate an affordable interest rate with the lender. For a FIRSTmoney festive loan you need a CIBIL score of 710 and above.

· Borrow smartly: Borrow what you can comfortably repay to avoid debt trap.

· Leverage festive season: If you’re planning to buy gold with a festive loan, apply during the festive season as offers on interest rates may stop post-festive season.

Benefits of FIRSTmoney Personal Loan for Gold Purchases
 

The FIRSTmoney Personal Loan from IDFC FIRST Bank offers a convenient way to manage your gold purchases responsibly:

· Instant Disbursal: Get your loan approved up to ₹10 lakh, with funds credited in as little as 30 minutes, helping you act promptly without any delays.

· Flexible Repayment: Choose a repayment tenure between 9 and 60 months that suits your monthly budget and comfort level.

· Zero Foreclosure Charges: If you wish to repay the loan early, you can do so without any additional charges.

· No Collateral Required: Enjoy the freedom of an unsecured personal loan without pledging any assets.

· No Documentation: Apply online with simple KYC and eligibility checks — no paperwork required.

Whether you’re considering gold as a festive investment, a gift for loved ones, or part of your Dhanteras shopping, the FIRSTmoney Personal Loan provides a practical and responsible way to manage your finances while keeping your options flexible.

Conclusion
 

Having understood how a personal loan shapes up to become an online gold loan seamlessly, given its multi-purpose nature, it’s safe to say that it makes for a practical option to fund your gold purchase this Diwali. The key is to approach it wisely by weighing the pros and cons and understanding essential aspects. You can also get the best deal during this festive season by being cautious and more prepared.  

To start, use the IDFC FIRST Bank personal loan eligibility calculator and welcome prosperity with gold, responsibly.