Why to select Gold Loan over Personal Loan?
If you are looking for a loan and you have gold with you, instead of going to the “Unsecured” Personal Loans, you can opt for the rapidly emerging Gold Loan. Many individuals are emotionally attached to their jewelry in India. So in their bank lockers, they like to keep it safe. But this view of people is changing day by day and, relative to personal loans, they are using their gold to boost short-term loans at a cheap interest rate. Every loan has some benefits and drawbacks. In order to apply for a loan, one should be aware of the advantages and drawbacks of that loan.
Why to choose Gold Loan over Personal Loan?
1. The Interest Rate
Compared to unsecured personal loans, gold loans have lower interest rates. Gold loan interest rates differ from person to person. An interest rate hovers between 13 percent and 16 percent in the Gold Loan, while it is between 12 percent and 24 percent in a personal loan.
2. Loans Repayment:
The Gold Loan offers facilities at the outset to repay only interest and will pay the principal sum at the end of the term of the loan. No other types of credit provide the consumer with this sort of choice.
In three different formats, a consumer can repay his loan; first in the form of Term Loan, second in EMI form; and third in the form of Overdraft.
But Personal Loan helps their client to repay their loan in the form of EMI, the other 2 formats do not apply.
3. Time for Disbursal:
The approval of the gold loan takes the bank barely 10 minutes, and the disbursement period taken by the gold loan is a maximum of 2 hours, as no detailed information is given.
But for a personal loan, the authorization and transfer of funds of the loan take a relatively long period.
4. Documents:
The secured loan is Gold Loans as it holds gold with the bank as protection. Minimal documentation is required. Your two photos, any ID evidence, and residence evidence must be submitted.
Since the personal loan is an unsecured loan, it needs multiple documentation to apply for a loan. You must apply your two pictures, some evidence of identification, salary slip for the last three months, bank statement for the last three months, and proof of residence.
5. Charges for pre-payment:
You can pre-pay your loan at any time with a gold loan, and most banks or any NBFCs would not place a penalty on you. But only after you pay all of your loans completely can you get your mortgaged gold back.
A pre-payment interest of 5 percent on the loan sum is imposed on the personal loan bank.
6. Installments Monthly:
EMI’s are assessed in a personal loan by their CIBIL score and repayment potential. So, individuals with a lower income or bad track record must pay for high EMIs, or often they are rejected.
But there’s no need to worry about low income or any CIBIL score in the gold loan because it’s a protected forum where you have to give your gold to the bank as protection. And for this loan, anyone can apply.
The Gold Loan Clause-One of the Gold Loan’s main drawbacks is that an individual can lose his deposited gold. If an individual fails to repay their loan, their savings can be lost and the lender can sell the gold to recover their dues.
Read Other Related Articles:
| Travel Loan | |
| Why Personal Loan? | Types of Personal Loans |
| When Should You Get a Personal Loan? | |
| What is a Spot Loan |
