Personal Loan vs Gold Loan: Which is better?
What is a Personal Loan?
A personal loan is a type of loan one takes for personal reasons and can be paid back via installments. The time frame of your loan can be determined by the terms of your loan. A personal loan is normally unsecured to meet your instant financial needs. That’s why they are also called as instant loan. There is no asset showcase required while availing a personal loan.
What is a Gold Loan?
Gold loan is a type of instant loan which one can get by pledging your gold ornaments or coins biscuits or bars etc. in return of cash. Your gold stays safe with the financial institutions while you manage your financial crisis.
Benefits of Personal Loan:
Availing a gold loan requires a bit lengthy process compared to the personal loans via instant loan apps. You will have to visit the lender once to avail the loan. The gold quality will be checked and current gold valuation will also be checked. In terms of a personal loan, you don’t have to visit any physical bank or branch, you can avail a loan sitting at home via cash loan apps. There are several personal loan app available in the market on google play store and apple app store. The entire process is cashless and faster. You can get a personal loan on the same day of application. The loan amount is directly transferred in your personal savings account. As the instant loan is also a short termed loan, the interest rate offered is quite competitive. The documents can be submitted to the lender via the app itself. Another huge advantage of instant loan is the privacy and secrecy. You don’t have to inform any third party before availing a loan. The details remain private between you and the lender. Whereas for a gold loan, you will have to discuss the details with the lender.
Benefits of Gold Loan:
The availability of the loan amount is higher in gold loans vs the instant loan. One will get a maximum cap of the instant loan amount as per their salary when it comes to personal loan. Whereas gold loans can be offered up to 1.5 crores. So in case you need a higher amount, a gold loan will be feasible for you. Gold loans can also be availed for as low as Rs.1000. These loans are completely secured against the gold pledged so the credit score is not important or is negligible. The lenders can recover the loan by selling the pledged ornaments. The documentation required for a gold loan is extremely minimal compared to the personal loan.
Which option is better, completely depends on the borrowers need and capabilities. If your credit score is not good and you need a loan for a higher amount, a gold loan will be a good option. On the other hand, if you have a stable income and a good credit score and need an instant loan, personal loan would be a better option.