Diwali is around the corner, and your shopping list keeps getting longer. There are gifts to buy, relatives to visit, sweets to prepare and a lot of decor-related purchases for your home.
While these celebrations bring families together, they can also stretch your monthly budget. If your savings cannot cover everything, borrowing against gold jewellery might seem like a convenient option. However, before applying for a gold loan, consider whether the expense is necessary and how comfortably you can repay the money afterwards.
Start With Your Diwali Shopping List
Have you calculated how much you will actually spend this Diwali? It is easy to remember the bigger purchases while overlooking smaller expenses such as decorations, sweets, transport and last-minute gifts. For example, your planned expenses might include:
- Gifts and clothing
- Home decorations
- Sweets and family gatherings
- Travel and miscellaneous purchases
These expenses can easily add up and increase your planned expenses. In those cases, borrowing more than you need may seem like a good idea, but it can increase repayment pressure later. So, instead of borrowing the entire celebration budget, calculate the actual shortage. You might even reduce it by postponing a few purchases.
Plan The Expense Timeline
Not every festive purchase needs a loan. Some expenses can be shifted to later if not urgent. For example, if you need to replace a broken refrigerator and buy a new washing machine because you don’t like the old one as much, prioritise the refrigerator first.
Ask yourself whether the purchase will interrupt your Diwali celebrations. If the answer is no, consider saving it for later instead of borrowing a large amount through a gold loan.
Understand How Your Jewellery Is Valued
Lenders assess the purity, eligible weight and prevailing value of the pledged gold. Stones and other non-gold materials generally don’t count toward the eligible weight.
Lenders advertise gold loan per gram amount in most cases. However, you may not receive that amount for every gram of jewellery. For example, a 25-gram necklace may contain decorative stones or other materials.
The lender will assess its eligible gold content before determining the loan amount. The applicable Loan-to-Value limit also affects the final amount offered.
Think About Your Budget After Diwali
This is where many borrowers need to be particularly careful. October and November expenses may already include regular household bills, school fees, insurance premiums or existing loan instalments.
Adding another repayment obligation could leave little money for unexpected needs. Before accepting a loan, calculate your monthly income after essential expenses.
Also, check whether the repayment schedule involves regular instalments, periodic interest payments or settlement at maturity. Choose an arrangement that matches money you can reasonably expect to receive.
Compare The Complete Borrowing Cost
The advertised interest rate is only one part of the expense. Ask the lender about processing charges, overdue penalties and any applicable early closure fees. Similarly, comparing the gold loan per gram offered by different lenders will tell you about potential borrowing eligibility, not the total repayment amount.
Request a clear explanation of the principal, interest calculation and repayment deadline. A slightly smaller loan with manageable repayment conditions may serve your needs better than a larger amount.
Remember That Your Jewellery Is At Stake
Family jewellery often carries memories that money can’t measure. When you pledge ornaments, the lender holds them as security until you settle the outstanding dues. If repayments remain overdue, the lender may eventually auction the jewellery after following the applicable procedures.
Therefore, avoid pledging ornaments that your family cannot afford to lose simply to fund optional celebrations. NBFCs, such as Manappuram Finance, offer different gold loan schemes and digital facilities for a smooth gold loan experience.
Conclusion
Diwali is one festival where shopping lists tend to go over budget. However, spending too much should not push you into debt. So, if you plan to take a gold loan this festive season, focus on your actual financial need rather than the maximum amount available.
A carefully selected gold loan can help you manage Diwali expenses well without creating unnecessary repayment pressure.