Gold Loan vs Personal Loan: Which is Better & Why?

Sometimes a sudden financial emergency arises where you need a certain amount of money on an urgent basis. When you need money on an urgent basis the most preferred option by everyone is taking a loan. Generally, for short term loans people prefer taking loan against gold or personal loan. And for huge amount loan against property is taken which has the long-term repayment tenure.


For short term requirements people consider taking a gold loan, because applying for a gold loan is an easy process. You don’t need to have too many legal documents or credit history. So, the process of getting a gold loan gets completed within a few hours. Taking a gold loan or personal loan is an individual person's choice but, you need to understand the process of both the options. In this article we will discuss which loan option is better, gold loan or personal loan. So, let’s get started.

What is a gold loan?


A gold loan is a secured loan option where you need to mortgage your gold jewellery, coins or bars. Any one of the items can be kept for mortgage to acquire a loan against it. You have various options to repay the gold loan, once the loan is paid the lender returns the deposited gold back.


What is a personal loan?


A personal loan is an unsecured loan where you don’t need to keep any kind of asset as collateral. Since you are not mortgaging any asset with the lender, personal loan tends to have higher interest compared to gold loan. So, you need to repay the loan quickly in monthly EMIs.


Things to keep in mind while choosing between Gold loan and Personal loan:


Now you have basic knowledge about what is the difference between a gold loan and a personal loan. Further let’s understand the factors that should be followed while opting for any of the loan options. Following are the factors that will help you to make the right loan decision.


1) Interest rate:


This is the most crucial factor that should be checked before applying for a loan. Because every loan option has a different interest rate, you need to check if the interest rate is suitable for your pocket. The higher the interest rates will be, the higher will be your EMI amount. That is why choose the loan option with lower interest rates. Generally, personal loans have a higher rate of interest compared to gold loans. And personal loan interest rates change from one lender to another.


2) Loan amount:


Before opting for a gold loan or personal loan you need to analyse how much loan you require, for what purpose. Because for any loan option there is a certain amount limit, beyond that limit you cannot get a loan. For example, personal loan has a maximum limit of 40 to 50 lakh only then you can’t get a loan beyond 50 lakh . And personal loan amount depends on the borrower's monthly income and capacity to repay loan amount on time. Whereas, for gold loan the loan amount depends on the overall value of gold articles submitted to the lender.


3) Loan tenure:


After understanding the loan amount it is necessary to know about loan tenure as well. Loan tenure is the duration of time given by the lender to repay loan amount in that specific time. Borrower can choose the loan tenure according to his convenience. For a personal loan you can choose a tenure minimum of 12 months and maximum 60 months. Whereas, for gold loan maximum tenure is of 2 years. Choose loan option according to tenure and your repaying capacity otherwise you may default on the repayment.


4) Eligibility criteria:


If you want instant loan without wasting any time, then you should opt for a gold loan. Gold loans do not have many eligibility criteria. So, the process of gold loan application is completed without consuming time. But if you want to take a personal loan then the loan process may take a longer time. Lender checks the borrower's credit history, legal documents before sanctioning the loan. In case the borrower has a bad credit history he cannot get a personal loan.


5) Loan repayment method:


And the last one is by which method the loan can be repaid. So, there are various options through which the loan can be repaid. For personal loan payment you can repay via Equated Monthly Installments (EMI). Whereas, gold loan amount can be repaid at regular intervals monthly/ quarterly/ semi-yearly / yearly whichever option is preferable for you.

These are some points which are necessary to be followed before you think of applying for a gold loan or personal loan.

If you are thinking of applying for a gold loan then Augmont GoldTech Private Ltd provides instant gold loan. Augmont gives gold loans at lowest interest rate and in the most hassle – free way.


Why take Augmont Gold Loan?


There are many gold loan providers in the market but it is necessary to take loans from good trustworthy place. Augmont tries its best to offer good time to time services to our customers. We also offer lots of benefits to the customers on gold loans. Let’s look at them.

1) Speedy disbursal:

We understand customers urgently need to apply for the gold loan. So, we have very lenient eligibility criteria which need to be completed online. And your loan process gets completed within a few hours.

2) Low interest rate:

As gold loans are secured loan banks or non -banking financial institutions charge low interest on it. And if you take a personal loan the rate of interest is relatively higher.

3) Physical gold security:

When a borrower mortgage gold items with the lender, from that second it becomes our responsibility to keep gold safe. Generally, gold is kept safely in the bank vaults till the principal amount of loan is repaid.


4) Minimum processing fees:

Some banks or non-banking financial institutions do not charge processing fees or else charge less fees. Because as said earlier gold loan processing does not require much time.


Why are gold loans better than personal loans?


If you want money for extreme emergencies like medical purposes, business purposes or for education, that time a gold loan can save you. Because if you think of a personal loan you have to go through a long process then only the loan application will be approved. On the other hand, personal loans interest is higher than gold loans interest. And if you have gold lying in your locker why not use it during an emergency?


Conclusion:


For emergencies taking a gold loan is a wiser choice. Augmont is your one stop destination for quick gold loan requirements.


Disclaimer


This data is for Academic purpose only. The data published on this post is just my opinion based on my own research and analysis and is provided as a general market commentary. As it does not take into account of your personal circumstances, please do not invest based solely on this information. By Viewing any material or using the information within this post you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general information provided here.

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