Gold Loan vs Personal Loan

The two most prominent types of loans under secured loans are gold loan and home loan. At the same time, one of the most common examples of unsecured loans is personal loans.

What is the difference between these two types of loans anyway?

Gold loan: 

It is a form of secured loan wherein the individual pledges their gold ornaments, jeweller, gold bars or coins to get money for the value of the gold based on the gold rate today that is the rate of that amount of gold on the day you are applying for a gold loan. Availing of a gold loan is a simple process. It does not require you to have a credit score like the other type of loans expect you to have. All you need to have is a stable and steady job that gives you sufficient income to pay the interest amount in whole every month and manage other expenses.

It doesn’t matter what your profession is or what kind of job you do. You need to be in a position to pay the interest for the amount that you borrow. You can be any age, but you have to be above 18 years to avail yourself of a gold loan in your name. The documents required to avail of this loan are the same as any other kind of loan. Gold loans also offer you loans for lower tenures, making it easier for you to get the amount and finish paying off the credit as soon as possible. One such bank that offers excellent gold loan services is the Muthoot Finance Gold loan.

Personal loan: 

It is an unsecured form of loan. The individual would only have to pay the processing fee for the application, have a decent credit score, and be eligible to avail the amount they wanted. A personal loan has various advantages. The amount borrowed from a personal loan can be put to various uses and its long loan tenure helps you take less tension and plan your expenses for the next few years accordingly. Having a personal loan would also instil financial seriousness in you. 

That means you would be very careful as to where, when and how you spend your money, and you would be careful not to overspend. Because you would need to have money to pay the interest amount the next month without fail. Failing to repay the monthly instalments would have a negative impact on your credit score or CIBIL score. However, unlike a gold loan or any other type of secured loan, in the personal loan, you do not have to provide any surety to be eligible to avail of a personal loan.

The eligibility criteria for a personal loan would be that the applicant would have to be above 18 and less than 65 at the time of the loan maturation. The documents required to avail a personal loan are the same as what you would submit to avail of any kind of loan. But you need to be really careful and well prepared about your CIBIL score.

Conclusion: 

Both gold and personal loans have their own advantages and disadvantages. But the applicant has to keep in mind the requirements for the two and decide which type of loan would suit their personal needs and preferences and to avail the loan accordingly.

Also Read:- Business Loan Vs Personal Loan