gold loan vs personal loan

Is Gold Loan Cheaper Than Personal Loan? Here Is Everything You Need To Know

Our lives are filled with the desires and needs and to fulfill them we need funds which are sometimes not available with us. We have to take loan to fulfill our needs as savings take higher investment of time as well as funds and then too it does not provide us with immediate fund requirements.

What is gold loan and how does it work?

gold loan vs personal loan

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Every time it is not possible to take a personal loan and so the gold loan comes into the market. You have kept your gold ornaments and the coins, bars or biscuits in the locker or at your home which are not going to be useful in anyways. So why not to take a loan on them by keeping them on mortgage.

Gold loan is a very simple concept. You just need to keep your gold ornaments and the coins, bars or biscuits pledged and will get money in exchange of them. You just need to repay all that money with the pre-determined rate of interest to get back your money from the Pawnee. The Pawnee will provide you the money after all the assessment and satisfactory check that all the gold papers are properly presented by you.

Also Read : Steps To Follow Before Applying For A Business Loan

What is personal loan and how does it work?

gold loan vs personal loan

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Personal loan means the loan provided to a person for his personal use and not for the business and trade which he is carrying on. This type of loan can be taken for any of the purpose like for family to go for vacations, for the medical emergency, for purchase of the household appliances like television, A.C, etc.

This type of loan can be of both the types i.e. secured as well as unsecured. Secured loan is secured by the asset purchased by the person taking loan or by the signature of the guarantor (i.e. secured by guarantee). The unsecured loan is mostly based on the credit worthiness of the person taking loan, it is dependent on the credit score of the borrower and his capacity to repay the loan. The installments are based on the period of repayment, if the period is more than the installment will be of fewer amounts and vice versa.

Generally gold loans are cheaper than personal loans

gold loan vs personal loan

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As in personal loan no security is given thus they charges higher processing fees. The other benefit to go for personal loan is that no major income proof is to be given. The loan is generally available on the value of gold. The interest rates on gold loan is around 12-15% whereas it is relatively higher in personal loans. When loan is repaid before the expiry of term the bank charges pre-payment charges but it is not same in the case of gold loans as there are no pre-payment charges. In general loan carries EMI with them that is loan needs to be paid on fixed EMI, but the biggest benefit for gold loan is that there can be option of NO EMI. Only interest amount is to be paid at a fixed interval of time. It is, although, totally subjective from person to person whether to go for personal or gold loan.