Dhanteras is considered an auspicious occasion to buy gold. People believe that it brings wealth, happiness and prosperity. On the day of Dhanteras, markets are flooded with families hopping to stores for best offers on gold jewellery, coins, or bars.
For payment methods, many choose UPI, net banking or even enter installment schemes. While UPI and net banking require you to make the payment upfront, credit-card-like installment schemes are mainly chosen by those who don't wish to pay upfront.
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Before entering such a scheme, it is important to check the additional charges, processing fees, and applicable interest rates. Even if your seller offers discounts, you should compare the long-term costs with the value of gold to avoid any financial stress later.
To be clear, gold and jewellery purchases are generally ineligible for bank credit-card EMI conversions in India. Still, some jewellery chains may offer similar schemes
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Example: Buying Gold Worth Rs 1 Lakh Using An Installment Scheme
Particulars | Amount |
Gold jewellery price + making charges | Rs 1,00,000 |
GST on jewellery (3%) | Rs 3,000 |
Total purchase value | Rs 1,03,000 |
Repayment obligation:
- Monthly interest rate: 3.5% (illustrative)
- Repayment period: 12 months
- GST on interest: 18%
Monthly instalment before GST: Rs 10,660
Total of 12 instalments: Rs 1,27,920
Total interest: Rs 24,920
GST on interest (18%): Rs 4,486
Total repayment: Rs 1,32,406
Note: Figures are illustrative and assume interest is calculated monthly on a reducing balance.
When Will You Recover The Cost?
Assuming that the precious metal appreciates at 10% average per year, the value of Rs 1 lakh gold will be around Rs 1.33 lakh in three years. This means that you will need to hold the gold for at least three to make up for the cost.
Before buying into such schemes, do check:
- Whether the scheme charges flat or reducing-balance interest.
- Any joining, processing or administration fees.
- Whether making charges and GST are included in the installment calculation.
- Whether early closure or missed payments attract penalties.
ALSO READ: Why Silver Is Falling Three Times Faster Than Gold, And What It Means For Dhanteras Buyers
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