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Gold Loan Vs Personal Loan: The biggest difference between gold loan and personal loan is the interest rate and speed of loan approval. The interest on gold loan is less because the gold is pledged with the bank, whereas a personal loan can be expensive as it is unsecured.
Gold Loan Vs Personal Loan: If you need money immediately and are thinking whether to take a gold loan or a personal loan, then it is important to understand the advantages and disadvantages of both. The biggest difference is the interest rate. Gold loan is a secured loan, so its interest rate is usually low. Whereas personal loan is available without any security, hence its interest rate can be high.
When to choose gold loan?
If you need money very quickly, like for a doctor’s emergency or to make an immediate payment, then a gold loan is the fastest. Banks and NBFCs give money within minutes, because they do not have to do much investigation. Even if your credit score is weak, you can easily get a gold loan because your gold is its guarantee. Repayment in gold loan is also very flexible. You can take the option of paying only the interest or finally close the loan by paying the lump sum. This is especially good for those people whose income is not regular – like freelancers, small businessmen etc.
When to choose personal loan?
If your credit score is good and you want a long term loan like for 3-5 years then personal loan can be a better option. In this you do not have to mortgage your gold, hence there is no emotional risk. But if the credit score is weak, the personal loan may be expensive or the bank may reject it.
Understand the emotional value of gold also
For many people, gold is not just an investment but also has a sentimental value. If you are not able to repay the loan on time, the gold may also be auctioned. Therefore, choose this only when you are completely sure about the repayment.
