People are always in need of funds. It could be to finance your child’s education or wedding, to meet the medical expenses, etc. One of the standard methods that people opt for in such scenario is personal loans. Although it does fulfil all kind of human needs, it involves lengthy procedures. In such cases, your gold obsession can take a backseat for a while and be put to use to get some money. Loan against gold is the second-best tool to resort to meet quick financial needs. Since your gold serves as collateral, you can easily procure the loan.
Banks sanction the loan based on its purity, its form (biscuit, coin, jewellery, etc.) Often, people are caught in a fix as to which is a better investment tool: personal loans or loan against gold? We give you 5 reasons why the latter stands out:
1) Interest rate: Gold loans are secured. You receive instant finance as your gold acts as security. The interest rate of a gold loan in India is competitive falling under the range of 10 to 16 per cent. Personal loans, on the other hand, begin at 12 per cent.
2) Pre-payment charges: Banks levy a 5 per cent pre-payment penalty on the outstanding loan amount. As for a gold loan, you can pre-pay the amount anytime, and there will be no penalty. However, the banks will return your gold only after you have paid the entire loan amount.
3) Eligibility criteria: Personal loans require you to fulfil specific eligibility criteria such as income level, repayment capability, etc. Often, self-employed and salaried employees face the flack if their credit scores, income levels and job security are not within the safe zone. The sole and major criteria for a loan against gold is that you should provide gold as collateral and its value should be 10-15 per cent higher than the amount you seek.
4) Minimal documents: Personal loans involve plenty of paperwork as it is an unsecured loan. Documents related to your identity, date of birth and address proof need to be produced, which makes the procedure lengthy as well. In case of a gold loan, all you need to furnish are your ID and address proofs. If your gold is of higher value, little paperwork is involved.
5) Quick sanction: Personal loans are meant to be quickly disbursed. However, that is not the actual case. As each of the documents needs to be verified, personal loans can take anywhere between 3 to 10 working days to get sanctioned. Meanwhile, a gold loan in India gets processed in either 4 hours or 24 hours. It serves as your best comrade at the time of emergencies.
Although loan against gold scores higher than personal loans in many factors, it is necessary to ensure the safety of your gold. It is recommended to opt for reputed banks and financial institutions where your gold will be secure.
Banks sanction the loan based on its purity, its form (biscuit, coin, jewellery, etc.) Often, people are caught in a fix as to which is a better investment tool: personal loans or loan against gold? We give you 5 reasons why the latter stands out:
1) Interest rate: Gold loans are secured. You receive instant finance as your gold acts as security. The interest rate of a gold loan in India is competitive falling under the range of 10 to 16 per cent. Personal loans, on the other hand, begin at 12 per cent.
2) Pre-payment charges: Banks levy a 5 per cent pre-payment penalty on the outstanding loan amount. As for a gold loan, you can pre-pay the amount anytime, and there will be no penalty. However, the banks will return your gold only after you have paid the entire loan amount.
3) Eligibility criteria: Personal loans require you to fulfil specific eligibility criteria such as income level, repayment capability, etc. Often, self-employed and salaried employees face the flack if their credit scores, income levels and job security are not within the safe zone. The sole and major criteria for a loan against gold is that you should provide gold as collateral and its value should be 10-15 per cent higher than the amount you seek.
4) Minimal documents: Personal loans involve plenty of paperwork as it is an unsecured loan. Documents related to your identity, date of birth and address proof need to be produced, which makes the procedure lengthy as well. In case of a gold loan, all you need to furnish are your ID and address proofs. If your gold is of higher value, little paperwork is involved.
5) Quick sanction: Personal loans are meant to be quickly disbursed. However, that is not the actual case. As each of the documents needs to be verified, personal loans can take anywhere between 3 to 10 working days to get sanctioned. Meanwhile, a gold loan in India gets processed in either 4 hours or 24 hours. It serves as your best comrade at the time of emergencies.
Although loan against gold scores higher than personal loans in many factors, it is necessary to ensure the safety of your gold. It is recommended to opt for reputed banks and financial institutions where your gold will be secure.
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