Which is Better Gold Loan or a Personal Loan

So let's start by understanding what gold loans and personal loans are. 

Gold loan is a secured loan that the borrower takes from the lender by taking money against gold. It is the best option to go for if you have a short-term money requirement. The demand for gold loans has increased a lot because the gold rate is increasing a lot, the Gold Rate Today is INR 49,700 which is high compared to the past.

The features of the gold loan are :- 

1: Fast processing :- The application process is comparatively fast. You don't have to wait for days or months to get your gold loan approved. Most of the banks and NBFCs give cash instantly once the documents are approved and the gold is verified. For example- the Gold Loan at Manappuram.

2: Rate of interest :- The interest usually depends on the lender to the lender. Some may charge 7.50% whereas some can charge 13%. It depends on the bank. But the rate of interest of gold loans is usually low when compared to other loans. And if you want to lower your rate of interest even more there is an option where you add any other asset as collateral.

3: Paperwork :- There are not many requirements for paperwork. You only have to give copies of basic documents like:-

• Aadhar Card
  
  
• Pan Card
  
  
• Voter ID Card
  
  
• Passport
  
  
• Rent Agreement
  
  
• Utility Bills, Telephone Bills, Electricity Bill
  
  
• Driving License
  
  

Banks usually don't ask for income proof when one is applying for a gold loan. Banks give individuals the flexibility to do whatever they want with that money, you are not reasonable to anyone. 

• Credit Score :- Unlike other loans you don't have to maintain your credit score to get a gold loan. The thing that matters the most is whether or not you'll be able to repay the amount with interest.
  
  
• Flexible repayment :- Banks offer you several options for repayment, you can pay however you want, for example:-
  
  

• If you want to pay the whole amount at the end of the tenure you can do that.
  
  
• If you want to pay the half amount at the initial stage and the rest at the end you can do that.
  
  
• And if you want to pay the whole amount every month in small fractions then you can go for an EMI option. 

Personal loan :- It is an unsecured loan, made to meet your current financial needs. You don't have to keep anything as collateral or security to avail this loan.
 

Features of personal loan are :- 

• No collateral :- For a personal loan, you don't have to give anything as collateral or security. This is one of the most advantageous things about a personal loan. But it is completely optional, if you don't have any assets and you want a loan immediately then you can go for this option. But if you have an asset then you can go for a gold loan or any other loan.
  
  
• Complete flexibility :- You are completely flexible to use the money you get from this loan however you want. But you can't use it for illegal activities.
  
  
• Paperwork :- You'll have to complete your KYC to get approved for this loan.
  
  
• Credit score :- You'll have to maintain a decent credit score to get a personal loan.
  
  
• High-interest rate :- As a personal loan is an unsecured loan, the interest rate is usually high for unsecured loans. 

Conclusion :- Both the loans have their own unique properties. Both have reasonable features and are suitable for different situations. To compare all the choices you have in your hand and then go for the best one.

Read More:- Ten Steps That You Need To Follow While Applying For A Personal Loan