Take out a gold loan from an Indian bank with interest rates ranging from 7.30 percent to 29 percent per year. Depending on the loan plan you want, you can get a loan for up to Rs.1.5 crore with a maturity period ranging from 3 months to 3 years. In the case of a financial emergency, you will promise your gold ornaments and jewellery for donations.
When you need money quickly, both a gold loan and a personal loan come in handy because neither finance facility has an end-use limit on loan funds, making them the preferable alternative. However, you must choose between the two, based on your financial requirements.
Both financial instruments are favoured, but their interest rates, charges, and fees are different. An unsecured loan is a personal loan, while a secured loan is a gold loan. Now that you know how to pick which kind of loan to take, here are few guidelines to help you determine which loan is best for you.
Some Features of Gold Loan
Purpose: A gold loan may be used to fund a variety of needs, including tuition expenses, medical emergencies, vacations, and so on.
Protection: The gold that has been pledged with the bank or financial institution serves as security or collateral for the loan number.
Tenure opportunities: Tenure options will vary from three months to 36 months.
Other costs and charges that can apply to a gold loan include transaction fees, late payment charges/penalties for not paying interest, appraisal fees, and so on.
Repayment Plans: When it comes to repaying a gold loan, creditors have three options. There are the following:
Equated Monthly Installments for Repayment (EMI)
Interest is paid up front, and the principal loan balance is repaid at the end of the loan term. Profit is paid on a monthly basis, and the principal loan balance is repaid at the end of the loan term.
Rebates: Once the creditor repays the interest on a loan against gold on a daily basis, some lenders will give a refund on the current interest rate. This refund will be somewhere between 1% and 2% of the initial interest rate.
Comparison factors with other Loans
Processing Time: Since a gold loan is a guaranteed loan, the disbursement time is very short. The money is usually transferred to the borrower's account within 24 to 48 hours. Personal loan application approval, on the other hand, will take 3 to 7 days since the applicant must send pay stubs, bank statements, and other supporting documentation. The certificates are checked after they are submitted, which prolongs the disbursement process. Many banks already give online loan approval, making the process of getting a personal loan quick and easy.
Loan Amount: Personal loans usually vary from 50,000 to 25 lakhs, but some lenders will lend up to 75 lakhs. The amount of a gold loan, on the other hand, is determined by the worth of the gold commodity you are pledging as collateral. The RBI, on the other hand, has prohibited lenders from approving gold loans worth more than 90% of the gold's value. If you have gold that meets your funding needs, a gold loan is an option; otherwise, a personal loan is a good option for high-value needs.
Interest Rates: Personal loans and gold loans have different interest rates. Since gold loans are guaranteed loans, the interest rate is smaller, starting at 9.90 percent. A personal loan, on the other hand, has an interest rate that ranges from 10.45% to 26% per year. If you have a bad credit score, you should consider a gold loan because banks do not review credit scores on gold loans and offer a higher interest rate on poor credit scores on personal loans.
Eligibility: Anybody above the age of 18 may qualify for a gold loan, and there is no need for a minimum wage because the loan amount is based on the gold valuation. A salaried employee, on the other hand, would have a minimum wage of 25,000 to qualify for a personal loan. An candidate must have more than three years of work experience and a credit score of at least 650. In contrast, credit score has no bearing on a gold loan.
Personal loans have the alternative of redemption in the form of EMIs (which have both interest and principal), but some gold loan plans compel borrowers to pay the interest per month and the principal balance at maturity. In other situations, the creditor can pay the interest portion of the loan during the disbursement process, with the principal to be charged at the conclusion of the loan term. If a borrower has a short-term cash flow dilemma, he may choose the gold loan non-EMI alternative.
Gold Loans are loans that you can get by pledging your gold jewellery to a bank. ICICI gold loan can be used for both personal and company expenses such as children's schooling, marriage, and other financial crises in the household. The gold mortgage serves as a guarantee for the loan.
ICICI Bank Gold loan provides a loan against gold that requires minimal paperwork and is processed quickly. Customers with jewel loans may prepay in part or get their loans foreclosed on by the bank. The bank also provides low-interest loans against gold for agricultural purposes.
Must Read:- What is the Tenure Period of a Gold Loan?
