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Understanding How Millennials Are Using Loans Against Their Gold Assets To Their Benefit

Discover how millennials are utilizing loans against their gold assets to their advantage. Learn more about the benefits of this financial strategy and how it can help you achieve your goals!

16 Mar,2023 11:06 IST 2375
Understanding How Millennials Are Using Loans Against Their Gold Assets To Their Benefit

In Indian households, gold has long been accumulated for centuries as a security measure that can be disposed of and used in difficult times. However, the value of gold as an asset has grown over the years as more ways to monetize and use this asset to fund needs other than those in distress have emerged over time. Examples include partially funding a dream wedding, paying for a dream vacation, or paying for education.

In most Indian households, gold is purchased or gifted at many important and auspicious occasions such as festivals and weddings. However, physical gold generates no interest income while sitting at home or in a bank locker. Individuals and families can now use this to fulfill their short-term needs or their elusive dreams.

With easy access and the fast-growing digitisation of gold markets, gold loans have emerged as an attractive option for young millennials to raise funds for their short-term personal needs. Millennials are now emerging as a dynamic category of borrowers looking to use their latent gold assets.

What Is A Gold Loan?

A gold loan is a secured loan obtained from a bank or non-banking financial institution in which the borrower uses their gold in the form of jewellery as collateral.

When the interest and principal are fully repaid, the pledge is released, and the borrower can retrieve their gold.

A gold loan is the easiest and fastest way to secure a loan for any short-term need. It usually requires minimal documentation and has a shorter term ranging from six to 24 months.

Why Is Gold Loan An Attractive Option For Millennials?

Gold loans have a number of benefits over some other loan types, particularly unsecured products like credit card debt and personal loans, for millennials, who are now taking advantage of this latent asset. A gold loan might even be preferable in some circumstances to a small business loan, which forms a lucrative seed capital for budding entrepreneurs.

• Minimal Documentation

Obtaining gold loans is easiest for those who have no history of credit because very little supporting documentation is needed. All they require is identification documentation, such as a PAN card or an Aadhaar card.

• Small Ticket Size

Depending on the gold ornament, the size of the loan can also be small and not always a huge sum to suit even small requirements. Some lenders provide loans starting at just Rs 3,000, making them suitable for millennials who may not have big requirements.
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• Flexibility Of Repayments

Gold loans are also simple to pay back because lenders give borrowers more options for how often they want to make payments: monthly, bimonthly, quarterly, semi-annually, or annually. This is also an attractive feature for millennials who can plan to repay the loan at their convenience.

Additionally, unlike the majority of other loans, gold loans offer a repayment option in which only interest must be paid and no EMI is required. The principal can be repaid at the conclusion of the loan term.

• Easy Digital Transfers

With the growing digitisation of the banking sector, millennials are keener on online banking and ease of business with minimal hassles. Therefore, an added advantage is that now banks and non-banking finance companies can complete the e-KYC process quickly and approve a gold loan in under five minutes if everything is in place. The loan is then disbursed. The money is credited to the borrower’s bank account online and repayments can also be made online.

• Lower Interest Rates and Other Charges

In order to obtain a gold loan, you must provide gold jewellery as collateral. The interest rates on gold are, therefore, lower than those on unsecured loans like credit card debt. Additionally, more collateral can result in lower interest rates.

Most lenders charge zero or very little fees for application processing. A majority of lenders also offer gold loans without valuation fees, foreclosure fees, or prepayment fees.


Gold loans have emerged as the fastest-growing personal loan segment, especially for millennials due to the ease of getting short-term loans on attractive terms. The requirement for minimal documentation and the quick processing time makes it the most attractive personal credit option for young borrowers. However, there is a sizable unregulated industry out there made up of neighbourhood lenders and pawn shops. Therefore, for young or first-time borrowers especially, it is important to avoid local moneylenders for a gold loan and to choose a trustworthy and regulated lender like IIFL Finance.

Like the majority of lenders, IIFL Finance authorises loans up to 75% of the gold market value, depending on the grade of the metal.

In addition to providing the best value for the gold, IIFL makes the loan application procedure simple and fast because of its customer-focused approach. Customers can also fill out an online loan application on the IIFL Finance website for instant approval of their gold loan within a few hours.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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