Which is a better Gold Loan with an EMI facility or Overdraft facility?

Whether you need funds for any medical emergency, the child’s higher education, investing in the business, family vacation or a destination wedding, a gold loan is a quick and sure-shot solution. Being a secured loan, the interest rates are lower in comparison with another form of credit.

Another best part about taking a gold loan is that it comes with features such as lenient eligibility criteria, minimal documentation, and quick loan disbursal. All the features make the Gold loan a quite popular option among customers when they are looking for instant funds.

Gold loan is available in various schemes according to the financial requirement. The two most common and popular schemes are ‘Gold Loan with an EMI option’ and ‘Gold Loan with an Overdraft facility. Here understands the difference between these two gold loan schemes.

1. Gold loan with an overdraft facility

A gold loan with an Overdraft facility function is the same as a credit card. You can do the spending according to your need and requirement up to the credit limit based on your gold loan value. Interest rate is applicable only the amount used. The interest rate is floating which keeps on changing from year to year. A gold loan with overdraft facility is suited for smaller emergency expenses and general business capital requirements.

2. Gold loan with an EMI option

Gold Loan with an EMI option is a kind of credit facility. Under this, you need to pledge your gold against the loan amount. When you choose Gold Loan with an EMI option, the rate of interest and tenure is fixed in the loan.

Both NBFCs and banks are offering this facility. Banks usually offer a minimum of 80% of the value of gold. Here at IndiaLends, we are offering 75 to 77% of the value against your gold ornaments. As far as gold interest rates are concerned. You can check here

It is the best option for making planned expenses under which you can easily plan your loan repayments.

Bottom Line

Choosing between the two options is based on one’s convenience, tenure, and advantages of each scheme. Overdraft facility involves benefits such as paying interest only on the amount used, which is not provided in case of an EMI scheme. Rates are higher in the case of overdraft facilities as compared to the EMI option. An overdraft can be used in case of a sudden emergency.