On almost every event in life, from medical exigency to education or from buying any new asset to marriage function, we all need funds, which are not readily available to all. A personal loan is one such helpful tool that makes it easier for the person to meet any financial obligations or emergencies on an immediate basis. There is no other better way as compared to a personal loan that can arrange cash funds in an urgent situation.
However, in the last few years, few other financial products are also rolled out in the market such as Gold Loan that allows the person to meet such immediate expenses, and we have seen an increase in the number of borrowers who are relying on it. This creates a little confusion among people who own the gold i.e. whether to take a gold loan or personal loan. If you are also planning to take a loan and is little uncertain about your decision, then following are some critical aspects or factors that should be checked to make the right decision between gold loan vs personal loan,
Whereas, in the gold loan, there are minimum eligibility requirements as compared to a personal loan. As gold acts as collateral, so you only need to be 18+ years and legally own the gold that you want to mortgage against the loan amount.
Top and reliable lenders offer personal loan at 12% to 20% interest rate, on the other hand, interest on gold loan range from 10% to 16%.
So if you want to settle some temporary financial emergency, a gold loan can be the best option but if you are looking out for a higher amount for a longer duration, then a personal loan is a great option.
From the above factors, you can differentiate between a personal loan and gold loan characteristics. The personal loan offers a higher loan amount with longer tenure, but with higher interest rates. However, in the gold loan, you can have an attractive interest rate with minimum eligibility requirements and lower additional charges, but it involves the mortgage of your gold as collateral.
Both loans have their benefits and drawbacks; you can select the one basis of your requirement and situation. If you want a higher amount for a longer duration, a personal loan is an answer. But if have gold ornaments available with you and want to pay less interest rate, then the gold loan is the solution.