Due to the ongoing pandemic with a trail of devastation and economic fallout, it is becoming difficult to sustain and manage the costs of living. Emergencies and financial shortfalls can arrive anytime. What can one do in such situations?
One can opt for either a Gold loan or a Personal loan. Both loans are known to have a faster processing time and also don’t restrict the user to use the loan amount however they please. But the main question that arises is which one’s the better option?
To understand this, we will check out few factors and compare these two loans. This will give you a better understanding and you can decide which loan is best for your situation.
A personal loan is an unsecured loan and the amount ranges anywhere between 50,000 to 20 lakhs. Some multiple banks and NBFCs can offer a higher amount as well. What you can note is that you can get a huge amount from this loan.
A gold loan is a secured loan and the amount will purely depend on the gold that you will keep as collateral. As per RBI’s rule, lenders cannot provide more than 75%* of your gold’s value as the loan amount. What you can note is that your loan amount can be higher if your gold’s value is higher.
Personal loans can be given for a loan tenure of 1 to 7 years. Yes, but we must inform you that only a few lenders will provide the longest tenure of 7 years. This is a better option if you wish to pay a smaller monthly EMI for a longer tenure.
Gold loans can be given for a loan tenure of 7 days to 5 years. Yes, but we must inform you that only a few lenders will provide the longest tenure of 5 years. This is a better option if you can afford a bigger monthly EMI for a shorter tenure.
Personal loans can be repaid through monthly EMIs that is a mix of the principal amount and interest amount. There is just one option and you must follow it.
Gold loans can be repaid through 3 different styles i.e. bullet repayment (pay the full amount in a lump sum), monthly EMIs and upfront interest method (repay full interest first and pay principal at end of loan tenure). There are 3 options and you can choose any one that suits you.
Personal loans can charge processing fees up to 3%* of the loan amount. These charges are standard and mandatory.
Gold loans can charge processing fees up to 2%* of the loan amount. These charges are lower than that of processing fees.
To conclude, the choice between personal loans and gold loans will depend on the need of the customer and also their credit score. Personal loans are good for people who need a higher loan amount. Gold loans are good for people who wish to get flexible repayment options and also have a lower credit score.
If you wish to apply for the Best Gold loan in India, apply here.