Which is Better, a Gold Loan or a Personal Loan?

Almost everyone, at some point or the other in their lives, my find themselves in need of financial aid. In many cases of financial emergencies, personal loans and gold loans are the best options people have. Borrowers should ideally carefully evaluate both options before choosing the one that suits their needs. 

Security

A personal loan is an unsecured loan, which means that a borrower does not need to pledge any asset as collateral. A gold loan, on the other hand, is a secured loan disbursed against the pledged gold. A gold loan carries lower risks for the lender, so it also comes with lower interest rates.

Eligibility

A personal loan generally comes with stringent eligibility criteria to check the creditworthiness and repayment capacity of a borrower. On the other hand, a gold loan is availed against gold that is pledged as collateral, so a borrower just needs to be over the minimum age requirement (generally 21 years) and a citizen of India.

For people who are eligible, both loans are viable options, but for those who may not have a stable income or a high CIBIL score, gold loans may be more suitable.

Processing Time

Personal loans involve a lot of documentation and verification of the borrower's financial standing and submitted documents, the processing can be time-consuming. Gold loans, on the other hand, require little to no documentation, which makes the processing time for gold loans much shorter, almost instantaneous in most cases. So, in cases where there is an immediate need for funds, a gold loan may be the better choice.

Ease of Application

Personal loans and gold loans can be availed online as well as offline through a lender. Additionally, for a personal as well as a gold loan payment online options are also generally offered. An extra advantage of gold loans is the Loan @ Home facility, which allows you to book an appointment online. A representative will visit you at home and take care of all application formalities, and gold valuation, and will take the pledged gold to be safely deposited as well, but only once the loan amount is disbursed.=

Which financial solution will best suit one’s needs may vary, but as long as you put in due thought and research, making the right decision won’t be a hassle.