When Switching Your Gold Loan Actually Saves Money
By SonaFin Editorial Team · · 6 min read
In short: Switching a gold loan saves money when the new lender’s interest rate is lower by enough to outweigh closure and processing costs. Compare total cost over your remaining tenure, not just the headline rate.
What switching a gold loan involves
Switching, also called a balance transfer, means a new lender pays off your existing loan and takes over the pledged gold. You then repay the new lender on new terms. Your gold is moved from one lender to the other as part of the process.
When it saves money
Switching helps when the new interest rate is meaningfully lower, when you have a large balance and a long remaining tenure, and when the costs of switching are small compared with the interest saved. It may also give you a higher loan amount or a more flexible repayment option.
It helps less when your loan is nearly repaid, when your current lender charges a foreclosure fee, or when the new lender’s processing and valuation charges cancel out the lower rate.
How to check before you switch
List the outstanding principal, the interest rate, the remaining tenure and any foreclosure fee on your current loan. Get the same details, plus fees, from the new lender. Compare the total you would pay over the remaining tenure under both. SonaSwitch does this comparison for you across lenders.
Compare gold loans before you decide
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