Gold Loan vs Personal Loan: Almost everyone needs money. Sometimes we wish there was more of it. That is when we start to find a suitable loan. Still, there are a variety of loans for people to use. Some prefers to apply for gold loan or personal loan. Many people find it difficult to understand which immunisation they should get. Don’t worry. This article will help you explain the difference even if you are talking to a young child.
Why don’t we begin by using a gold loan? If you leave your gold such as bangles or chains, with a bank or company, they give you a certain amount of money. You are assured that your gold is looked after by them. When you return the money you borrowed, you will get your gold once again. It works like using something important as security for a loan.
Now we will focus on what a personal loan is. A bank will lend you money when you request a personal loan. You are entitled to get these things with no obligation to give anything back. Banks cheque your current job, the amount of money you earn and how regularly you pay your bills. Should they decide you are safe, the loan will be approved for you.
But which one is better?
Let’s look at some points.
1. Speed: Gold loan is processed very quickly. A few hours after depositing gold, the money will be available for you. Getting a personal loan requires some time. They make sure of many details before making the money available to you.
2. Required paperwork: Gold loan is very easy to get due to its simple documentation. Only your ID and some jewellery. A personal loan is required to show things like salary slips, bank statements and proof of identity.
3.Interest Rate: Getting a gold loan generally means you pay less in interest. You will pay a smaller added amount. Personal loans tend to charge a greater interest rate. You have to pay back a bigger loan amount.
4. Safety: The bank takes care of keeping your gold safe. You get the property back when you have paid the loan in full. You don’t give assets in a personal loan which allows you to keep your gold safe. Failure to pay back the gold loan may result in you losing your gold.
5. Credit Score: If your credit score is good, you are likely to have no trouble getting a personal loan. But if you have a low credit score, taking a gold loan is a good idea since they mostly focus on the gold instead of credit.
6. Loan Amount: How much gold you hand over will determine the loan amount in a gold loan. Personal loan companies look at your earnings first and foremost.
7. Repayment: Depending on circumstances, you can make the interest payment now and the full principal payment later in a gold loan. Each month, you are required to make a set payment in personal loan.
So, what should you choose?
When you want cash quickly and own gold, consider a gold loan. It is very easy, quick and straightforward. Still, ensure repayment is possible, because your gold will be taken if you do not repay.
If you’re not comfortable putting your gold at risk and have a dependable income and high credit score, getting a personal loan is better.
Keep in mind that a loan involves repayment. You have to return the amount you borrowed. Do not take a loan unless you absolutely need the funds. Only borrow what you know you can repay.
Best Choice Tip: If your need is small and quick, gold loan wins. If you want a big amount for a long time and have a good job, personal loan is the way to go.
In the end, both loans have good and bad sides. Your need, income, gold, and credit score will decide what’s best for you.
Braj Verma is a resident of Rajgarh in Madhya Pradesh and is a content writer and freelancer by profession. He has a degree in Political Science from Barkatullah University, Bhopal. He has expertise in subjects like credit cards, banking, loan, insurance, political analysis and digital marketing.