When individuals need funds in such a short time, they prefer a gold loan or a personal loan; both types of loans are considered solutions to urgent financial requirements due to the quick availability of funds.
These types of loans are preferred due to their quick loan disbursement. Still, they significantly differ from one another in terms of collateral, interest rates, repayment flexibility, approval process, and other factors. With the knowledge of Gold Loan vs Personal Loan comparison, the applicant can choose which type of loan is better for them based on their financial situation and requirements.
What are Gold Loan Vs Personal Loan?
A gold loan is a secured type of loan that many popular banks and NBFCs offer. These loans required gold ornaments or jewelry as collateral for taking a loan, and the amount of the loan depended on the weight and purity of gold given as collateral. Because the lender secures this loan, they feel safe and less risky, which may provide a low interest rate on loans.
On the other hand, a personal loan is an unsecured type of loan, where the applicant does not need to provide any valuable assets as collateral to secure the loan. It will make the loan unsafe for the lender due to the lender charging a high interest rate, generally on this loan, compared to a gold loan. Many NBFCs or online lending platforms offer this loan. They can be used for many purposes, like medical, educational, wedding, travel, exams, etc.
Comparison of Gold Loan Vs Personal Loan based on Features
| Feature | Gold Loan | Personal Loan |
| Collateral Required | Yes, gold ornaments or jewelry | No collateral required |
| Loan Amount | Based on the gold value | Based on income, credit score, and profile |
| Interest Rate | Generally lower (7% to 12%) | Higher (10% to 24%) |
| Processing Time | Fast, often within a few hours | May take 1 to 3 days |
| Risk Factor | Risk of losing pledged gold | No asset pledge, but risk of default |
| Tenure | Shorter (up to 2 to 3 years) | Longer (up to 5 years or more) |
Important Blogs : CC Bank Gold Loan – Quick Approval & Low Interest Rates
Eligibility Criteria
For Gold Loan:-
- Age Required: Must be 18 years old
- Employment: Salary Persons, Self Employed Individuals, Homemakers, Pensioners
- Income: No income proof
- Credit Score: No credit score requirement
- Gold: Gold ornaments or jewelry must be between 18 and 24 carats
For Personal Loan:-
- Age Required: 21 years to 60 years old
- Employment: Stable income source for both salaried persons and self-employed individuals
- Income: Must meet the minimum income requirement set by the lender
- Credit Score: 650 or above preferred
Documents Required
For Gold Loan:-
- Identity Proof: Aadhaar card, PAN card, Voter ID
- Address Proof: Utility bills, Aadhaar card
- Photographs: 2 to 4 passport-size photos
- Income Proof: No income documents required
For Personal Loan:-
- Identity Proof: Aadhaar card, PAN card, Voter ID
- Address Proof: Utility bills, Aadhaar card
- Income Proof: Salary slips, bank statements, or ITRs
- Employment proof: Offer letter, Company ID, or Business Registration Documents
Pros and Cons of Gold Loan vs Personal Loan Comparison
| Loan Type | Pros | Cons |
| Gold Loan | Quick disbursal, low interest, flexible repayment | Risk of losing gold, short tenure |
| Personal Loan | No collateral, higher loan amounts, longer tenure | Higher interest rates, strict eligibility |
Frequently Asked Questions
Among gold loans and personal loans, which one is better in terms of cost?
Based on cost, a gold loan is cost-effective due to a low interest rate; however, it requires gold as collateral.
Can I take both a gold loan and a personal loan simultaneously?
Yes, it is possible to get both kinds of loans at the same time if applicants meet the eligibility criteria and the repayment capability that lenders want.
Conclusion
A gold loan and a personal loan have some similarities and differences, like the quick availability of funds common in both, and the requirement of collateral is needed in one but not in the other; the range of interest rates is different in both of them. Individuals can choose one of them by comparing Gold Loan vs Personal Loan Comparison, according to their financial needs and requirements.
