Both the loan options i.e. Gold loan and Personal loan offer competitive interest rates, quick loan disbursal and no restriction on end usage. Many borrowers often become confused while choosing the best one among both. Here are the benefits of both the loans that will help you make the correct choice.
1. Easy and swift processing: Gold loans processing is fast and easy. You just need to pledge your gold jewelry and basic KYC documents to get the loan. The loan disbursement will be done in a few hours if you meet the lender's eligibility criteria.
2. Low-interest rates: As a gold loan is secured, the rate of interest rates is comparatively lower than other secured loan options. This is one of the key reasons which makes this loan a better option when compared to others.
3. No credit history required: With gold loans, you do not have to worry about your credit history as banks do not consider it. Generally, you are not required to furnish your existing loans or debt obligations before availing this loan.
4. Income proof is not required: In this type of loan, financial institutions/NBFCs do not ask for any income/salary proof from the borrowers as the loan is secured. Therefore, anyone can apply for this loan and avail instant funds.
5. Flexible repayment options: Gold loan offers you several options for repayment which is not offered in other types of loans. The following are the three most common repayments options offered in this case:
6. Nil processing fee and pre-closure charges: In case of such loans, there are usually nil processing fee and pre-closure charges, which is not available in other kinds of loans.
Personal Loan: These are unsecured loans that are ideal for fulfilling short-term financial obligations. Such loans have been a popular option among many individuals to tide over any urgent financial need, especially in case of emergencies and unplanned big-ticket expenses.
1. No collateral required: This is considered as the greatest advantage of personal loans. You do not need to pledge any type of asset/security with your lender to get the loan. This feature makes it a preferable loan option over other loans.
2. Versatility: Personal loans can be taken for various purposes such as a home repair, wedding, higher education, family vacation etc. The lender will not ask you the reason for which you are availing a loan.
3. Simple documentation: Personal loans do not involve elaborate or complex paperwork. You just need to provide basic KYC information documents, proof of income and proof of address as required by the bank to approve your loan amount.
4. Quick disbursement: As the loan involves minimal paperwork and not so much stringent eligibility criteria, most of the lenders sanction the loan amount into the borrower’s account within 24-48 hours after the loan has been approved.
The decision to choose between a personal loan and a gold loan completely depends on your current financial situation and needs. If you want to build up your credit score or want money for a short duration up to 6 months to 1 year, then taking a gold loan would be a wise choice. It offers you a loan amount at a lower interest rate. On the other hand, if you have a long-term financial requirement, you need a longer tenure to repay the loan amount i.e. up to 5 years. Then personal loan would be a better choice.