Loan Tips: Personal loan or gold loan, which is better, weighs on these 6 parameters..
Nowadays people resort to different types of loans for their money needs. Personal loans and gold loans are two major options, between which there are many differences. It is important to understand the difference between these two types of loans so that you can choose the right loan according to your needs.
A personal loan is available without any property security, while a gold loan is taken against gold or other precious metals. Both have different benefits and limitations, which can be analyzed to make the right decision.
1. Interest rate
Personal loan: The interest rate on a personal loan is generally higher than that of a gold loan because it is an unsecured loan. In this, the bank does not get any physical security (collateral) for the repayment of the loan. Therefore, the risk in personal loans is higher, and due to this, the interest rate is also higher.
Gold loan: The interest rate on the gold loan is low because it is considered a secured loan. In this, the gold pledged with the bank is as a security, which reduces the risk to the bank and the interest rate is also low.
2. Loan amount
Personal loan: The amount of personal loan depends on your credit score and income. If your credit score is good and your income is stable, you can get a personal loan of a large amount.
Gold loan: In a gold loan, you get the loan amount based on the value of gold you pledge. If you have more gold, you can get a higher loan amount.
3. Loan tenure
Personal loan: The tenure of a personal loan can be long, i.e. from 1 to 5 years. The tenure of this loan depends on the loan amount, repayment terms, and bank rules.
Gold loan: The tenure of a gold loan is usually short, like 3 to 12 months. You need to repay it as soon as possible, as gold is pledged in it.
4. Approval process
Personal loan: Personal loan requires paperwork and a credit check from the bank, which is time-consuming. For this, you need a credit score, income certificate, and other documents.
Gold Loan: The approval process of a gold loan is fast because gold is mortgaged in it. For this, you do not have to do any long paperwork process, and this loan is available very quickly.
5. Purpose of loan
Personal loan: Personal loans can be used for personal needs, such as medical emergencies, marriage, travel or education.
Gold loan: The main purpose of a gold loan is when you need money urgently and you have physical assets of gold.
6. Returns
Personal loan: There is no investment or returns with personal loan. It is only a borrowed amount, which you have to repay.
Gold loan: There is no possibility of returns in gold loan as it is also a type of loan in which you mortgage your property (gold).
If you need money urgently and you have gold, then gold loan can be a good option. It comes with a faster process and lower interest rates. However, if you do not have any assets and need a higher loan amount, a personal loan may be better for you, but it comes with a higher interest rate.
