A loan is often the best answer to unexpected situations where you need money. Loans are also viable for planned undertakings, like paying for a wedding or your child’s education, as they can provide instant financial support. While there are different types of loans in the market, the two most popular ones are personal loans and gold loans.
The interest rates, collateral and charges levied on personal and gold loans differ. So, consider these aspects before choosing between these two options. Each of them also comes with their own pros and cons, and understanding their features is key to making a decision.
Read on to learn more about personal and gold loans, so you can decide which is right for you.
Quick Guide to Gold Loans
A gold loan requires you to get value for gold jewellery, coins or bars by using them as collateral for financing. This secured loan is usually affordable and allows you to tailor your repayment to your finances. It also comes with a low processing fee and affordable prepayment terms.
There are several advantages and disadvantages that gold loans have, and some of the important ones are:
| Pros of a Gold Loan | Cons of a Gold Loan |
| No restrictions on how you use the money, unlike other secured loans like home or car loans | The loan amount is linked to your collateral, but you get up to 75% of your gold’s value |
| Part-release facility offered by lenders gives you possession of some jewellery on part-repayment | Risk of losing your gold if you cannot repay the loan as the lender can auction the asset to recover dues |
| Affordable interest rates from banks and NBFCs | Approval and disbursal can take time as collateral needs to be evaluated |
| Your credit history doesn’t matter as much since it is a secured loan | Safety of your gold assets can be in question if you do not choose a reputed lender |
| You can pay EMIs every month or only the interest at regular intervals and the principal at the end of the tenure to suit your income, as per the lender’s policy | Since tenures usually go from 7 days to 36 months, gold loans are not ideal if you want more repayment flexibility |
Quick Guide to Personal Loans
A personal loan is quite different from a gold loan. With it, you can borrow money without pledging your valuable assets as collateral. This unsecured loan is based on your creditworthiness and income. You can find this type of loan with ease on a loan app or financial marketplace from leading banks and NBFCs.
Like gold loans, personal loans also have their own benefits and disadvantages, so see the table below:
| Pros of a Personal Loan | Cons of a Personal Loan |
| No need for collateral or security, which makes personal loans less risky | Since it is unsecured, it comes with a higher interest rate |
| You can use the funds for various needs with no restrictions on usage | Strict eligibility criteria related to your income and credit score |
| Easy and quick to apply for online as there is no collateral to evaluate | Prepayment, whether partial or full, usually comes with penalties and restrictions |
| Offers fast disbursal for urgent needs | Higher processing fees as the lender needs to verify your creditworthiness and other details to assess risk |
| Flexible repayment tenures up to 6 years or more | Repayment is usually in monthly EMIs as per the chosen tenure, and there is generally no option to repay in one shot |
Gold Loan vs Personal Loan: How to Choose?
Keeping the pros and cons of each loan in mind, you can choose a gold or personal loan based on what suits you. If you do not have a credit history or your credit score is too low, a gold loan may be better for you.
If you do not want to risk your gold ornaments, a personal loan may be more suitable. If you want a longer repayment tenure since you are borrowing a larger amount, a gold loan may not work. It all depends on your unique needs and what you feel more comfortable doing.
If you think both options can work for you and you are sure you can repay on time, use the EMI calculator to see which loan gives you more affordable financing.
Now that you know all about gold and personal loans, select the right financing option according to your requirements. Both these loans can help you bridge a cash crunch when used appropriately. To know if you qualify for either or apply for the one you need, download the Bajaj Markets App.
On this one-stop digital destination, you can get easy access to both personal and gold loans and enjoy affordable terms. Download the Bajaj Markets App on the App Store or Google Play now to get started!
A loan is often the best answer to unexpected situations where you need money. Loans are also viable for planned undertakings, like paying for a wedding or your child’s education, as they can provide instant financial support. While there are different types of loans in the market, the two most popular ones are personal loans and gold loans.
The interest rates, collateral and charges levied on personal and gold loans differ. So, consider these aspects before choosing between these two options. Each of them also comes with their own pros and cons, and understanding their features is key to making a decision.
Read on to learn more about personal and gold loans, so you can decide which is right for you.
Quick Guide to Gold Loans
A gold loan requires you to get value for gold jewellery, coins or bars by using them as collateral for financing. This secured loan is usually affordable and allows you to tailor your repayment to your finances. It also comes with a low processing fee and affordable prepayment terms.
There are several advantages and disadvantages that gold loans have, and some of the important ones are:
| Pros of a Gold Loan | Cons of a Gold Loan |
| No restrictions on how you use the money, unlike other secured loans like home or car loans | The loan amount is linked to your collateral, but you get up to 75% of your gold’s value |
| Part-release facility offered by lenders gives you possession of some jewellery on part-repayment | Risk of losing your gold if you cannot repay the loan as the lender can auction the asset to recover dues |
| Affordable interest rates from banks and NBFCs | Approval and disbursal can take time as collateral needs to be evaluated |
| Your credit history doesn’t matter as much since it is a secured loan | Safety of your gold assets can be in question if you do not choose a reputed lender |
| You can pay EMIs every month or only the interest at regular intervals and the principal at the end of the tenure to suit your income, as per the lender’s policy | Since tenures usually go from 7 days to 36 months, gold loans are not ideal if you want more repayment flexibility |
Quick Guide to Personal Loans
A personal loan is quite different from a gold loan. With it, you can borrow money without pledging your valuable assets as collateral. This unsecured loan is based on your creditworthiness and income. You can find this type of loan with ease on a loan app or financial marketplace from leading banks and NBFCs.
Like gold loans, personal loans also have their own benefits and disadvantages, so see the table below:
| Pros of a Personal Loan | Cons of a Personal Loan |
| No need for collateral or security, which makes personal loans less risky | Since it is unsecured, it comes with a higher interest rate |
| You can use the funds for various needs with no restrictions on usage | Strict eligibility criteria related to your income and credit score |
| Easy and quick to apply for online as there is no collateral to evaluate | Prepayment, whether partial or full, usually comes with penalties and restrictions |
| Offers fast disbursal for urgent needs | Higher processing fees as the lender needs to verify your creditworthiness and other details to assess risk |
| Flexible repayment tenures up to 6 years or more | Repayment is usually in monthly EMIs as per the chosen tenure, and there is generally no option to repay in one shot |
Gold Loan vs Personal Loan: How to Choose?
Keeping the pros and cons of each loan in mind, you can choose a gold or personal loan based on what suits you. If you do not have a credit history or your credit score is too low, a gold loan may be better for you.
If you do not want to risk your gold ornaments, a personal loan may be more suitable. If you want a longer repayment tenure since you are borrowing a larger amount, a gold loan may not work. It all depends on your unique needs and what you feel more comfortable doing.
If you think both options can work for you and you are sure you can repay on time, use the EMI calculator to see which loan gives you more affordable financing.
Now that you know all about gold and personal loans, select the right financing option according to your requirements. Both these loans can help you bridge a cash crunch when used appropriately. To know if you qualify for either or apply for the one you need, download the Bajaj Markets App.
On this one-stop digital destination, you can get easy access to both personal and gold loans and enjoy affordable terms. Download the Bajaj Markets App on the App Store or Google Play now to get started!
