Gold loan management: what to record on every loan

A gold loan is a secured loan: the item you hold is your protection if the borrower cannot repay. It is also the part most likely to end in a dispute, because the item is physical and small. Good records are what settle those arguments quickly. Here is what to write down on every loan.

The borrower

• Full name, phone number and address
• A photo ID and address proof, checked against the person in front of you
• A note of who they said owns the gold, if it is not them

The item

• A plain description of each piece: type, number of pieces, and any marks
• The weight as you measured it, in front of the borrower
• The purity as you tested it
• The value you placed on it, and how you worked it out
• Photographs of the items together and of any distinguishing details

Write the weight and purity in the same words every time. If your note says 24g gold chain, 22 carat, then that is what everybody sees later. Do not rely on memory.

The loan terms

• Amount lent, and how it compares with the value you placed on the item
• Interest rate and the method used (flat, reducing balance or interest only)
• The term, the repayment dates and the amount due each time
• Any fees or advance interest taken at the start
• The date the loan ends, and what happens if it is not repaid

Storage and release

• Where the item is kept, and who can open that place
• A record of every time it is taken out and put back
• A signed or acknowledged receipt when you hand the item back after the loan is cleared

Keep the paperwork with the loan

A signed agreement, the photographs and the receipts are only useful if you can find them. Keep every file attached to the loan it belongs to, not in a chat thread or a phone gallery.

The rules on valuation, how much you may lend against gold, and what you may do when a loan is not repaid differ by country and by type of lender. Check what applies to you, and take legal advice before relying on any general checklist, including this one.