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Gold Loan vs Personal Loan : Which Is Better । How To Apply For Loan ?

Gold Loan vs Personal Loan : Which Is Better । How To Apply For Loan ?

Gold Loan vs Personal Loan | Personal Loan | comparison between Gold Loan & Personal Loan | Compare Gold Loan & Personal Loan | લોનની માહિતી

Everyone needs financial help from time to time. There should be no shame in finding a loan option to get that help. However, there are many loan options for this and you may find it difficult to make the right decision. Such as Gold Loan vs. Personal loans cannot be decided.

Every borrower usually uses Gold Loan and Personal Loan for emergency cash. This article seeks to provide a comprehensive comparison of Personal Loan & Gold Loan so that you can make the right decision. And you can decide whether to take Gold Loan or Personal Loan.

🔹️Gold Loan - "Loan against Gold."

Gold Loan is also known by its other name. You will get a better idea of ​​what Gold Loan is. "Loan against Gold." Essentially, the borrower puts on their gold jewelry and is given a percentage of the value of that part as a loan amount, called a secured loan. The borrower pays a monthly installment until the loan is repaid, and the lender repays the deposited gold when the loan is completed.

🔹️Personal Loan - also works like a gold loan

A personal loan (such as a signature loan) also works like a gold loan, except that it is an unsecured loan, i.e. it is without collateral benefits. This loan can be obtained without leaving anything to guarantee repayment. It is difficult for a loan applicant to get this loan approved.

The Loan Agent or Loan Provider will examine the credit profile of the applicant during the application process for both the above loans. But that is not usually the case with Gold Loan approval.

When you decide to take a loan, you have many options. Which is often confusing. Here is the detailed information about which loan to take from Gold Loan Vs Personal Loan. Which are as follows.

🔹️Interest Rates - Gold loans

Loan providers charge high interest rates according to the payment for the loan. Gold loans, for example, have higher payments than personal loans or other unsecured loans, so their interest rates skyrocket.

On average, Gold Loan Interest Rate can vary between 7.5% to 29%. In contrast, the personal loan interest rate ranges from 9% to 24%. However, risk assessment plays a big part in interest rates for loans. Gold Loan has lower interest rates because it is a secured loan; Borrowers place collateral to reduce their non-payment risk. At the same time, the cost of interest on personal loans will eventually be higher due to the unsecured nature.

🔹️ Loan Tenure - The term of the loan

The term of a loan is the period that the lender pays the borrower to repay the loan. Personal loans have a term of one to five years, while Gold Loans have a term of less than three years to seven days depending on the loan amount.

While higher loan terms give you more time to pay off your debt, it also gives you time to earn interest, which increases the overall amount you pay. The term of a short loan offered by Gold Loan can be stressful, especially if you get a loan with a high interest rate. But lenders are confident that they will be able to repay their loans in a short period of time, making the short term loan a more cost-effective option in the long run.

🔹️Repayment Options - Payment Options - Personal Loan and Gold Loan

Personal Loan and Gold Loan will allow the borrower to avoid most of the hurdles of repaying their loan with EMI (equal monthly installment). It is the period of repayment of fixed monthly income on which the borrower and the lender agreed before the time; However, Gold Loans have more flexible repayment options. They better accommodate customers because secured loans guarantee timely repayment.

For example, some Gold Loans have only interest-paying option which allows them to pay interest till maturity, where they will start paying the principal amount. Another repayment option is to repay the interest in advance leaving the debtors to pay only the principal component at the end of the loan term.

For the best chance of repaying your loan, Gold Loan offers options to increase your repayment capacity.

🔹️Processing Time - Gold Loan or Personal Loan

Loan applicants will apply for Gold Loan or Personal Loan during financial difficulties as lenders can process them in less time. However, they will have to submit the required documents (such as proof of income, proof of residence, etc.) along with the loan application. While it is a long process in itself, Gold Loan handles the distribution of funds more effectively than Personal Loan.

When applying for an Average Personal Loan, lenders will check your credit score in many ways to see if you are able to repay the loan and determine the range of your Personal Loan. Getting a business loan involves additional steps where a loan-to-value ratio will determine if your company is eligible for financial risk. As the personal loan approval process is more extensive, it usually takes about 2 - 7 days to disburse your money. A few lenders (savings for illegally restricted lenders) will approve a loan if the borrower's credit profile is poor.

Unlike a personal loan, when applying for a Gold Loan, the lender will check the authenticity of your mortgaged gold and repay your loan from it without having your credit score processed.

Will determine the suitability of the amount. So if you are in serious financial trouble, lying around gold and have a poor credit history, Gold Loan will be your best bet to get a large loan amount in as little time as possible.

🔹️Processing Fee - Read 

While lenders will usually dispense Gold Loans to borrowers as quickly as possible, these come with a lot of processing fees that you have to pay before you can get your money. While personal loans have these fees, they are usually limited to service fees, insurance and processing charges.

On the other hand, with a Gold Loan, you will have to pay typical processing fees plus additional such as gold valuation fees (charged based on current gold value), administrative costs, documentation fees and more. Factoring in those extra costs will allow you to more accurately determine the actual cost of applying for a Gold Loan or Personal Loan and make better choices for your financial situation.

🔹️Conclusion

Giants vs. Vikings Compared to Personal Loan, neither of them really comes first. If you do not mind a slight delay in loan disbursement and opt for a longer repayment period with a longer interest rate, get a Personal Loan. On the other hand, if you have gold assets to put up for collateral and need a loan that day, apply for a Gold Loan even if you get a shorter repayment period.

However, the best thing about this loan is that a poor credit profile is not a major problem for the borrower's account.

The above information about Compare Gold Loan & Personal Loan is for information only. Its purpose is not to advise on taking or giving a loan. Be sure to consult your financial advisor before taking Gold Loan & Personal Loan.

Friends, if you still have any questions regarding Compare Gold Loan & Personal Loan, you can comment or ask Contact Us in the comment box below and friends. Thank you all so much for taking the time to read this post.

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