Unforeseen situations may arise at any moment in your life and it may put immense stress on your personal finances. If you are not careful, it may leave you in huge debts, which you would not be able to repay easily. The simplest way to avoid such stressful situations is to take secured loans, instead of unsecured ones. For instance, gold loans and loan against property are easier to handle for the borrower than unsecured loans, such as personal loans.
While picking between gold loans and loan against property, you need to determine the best one. Here are some factors that you need to consider in order to understand which of these two loans suits you better.
1. Collateral
Gold loans and loan against property are secured loans because you need to keep an asset as collateral for taking the loan. If you are unable to repay the money borrowed, the lender recovers the outstanding amount from the collateral that you keep with them. In the case of gold loans, the collateral is any gold items and jewellery that you possess. Similarly, in case of loan against property, you are required to use a property or house that you own as collateral for the sum borrowed.
2. Rate of interest
When you take a loan, the very first thing to consider is the rate of interest. For gold loans, the interest is fixed, while for a loan against property the rate can be either fixed or floating. A fixed interest rate is better since there is no risk of having to pay more due to the appreciating rate of interest.
3. Eligibility criteria
The next thing you have to determine is whether you qualify for a particular loan. For gold loans, there are hardly any requirements. If you own gold, you are eligible for such a loan against the said gold articles. On the other hand, lenders will want extensive documentation of age, income, property papers, stability and credit history, if you apply for a loan against property. Therefore, the procedure for gold loans is more convenient and fast. Furthermore, online gold loan application has made the procedure even simpler.
4. Repayment tenure
Repayment tenure refers to the duration that the lender allows for repayment of the loan. In the case of gold loans, this tenure is limited to just one year. However, for a loan against property, you can opt for repayment tenures of up to 20 years. Keep in mind that lower tenures will result in greater monthly instalments, and vice versa.
Keep these factors in mind before taking one of the loans. You need to consider your requirement and specific situation before taking a decision. However, gold loans are better if the amount is limited, while loan against property is recommended if you need a large chunk of money.
While picking between gold loans and loan against property, you need to determine the best one. Here are some factors that you need to consider in order to understand which of these two loans suits you better.
1. Collateral
Gold loans and loan against property are secured loans because you need to keep an asset as collateral for taking the loan. If you are unable to repay the money borrowed, the lender recovers the outstanding amount from the collateral that you keep with them. In the case of gold loans, the collateral is any gold items and jewellery that you possess. Similarly, in case of loan against property, you are required to use a property or house that you own as collateral for the sum borrowed.
2. Rate of interest
When you take a loan, the very first thing to consider is the rate of interest. For gold loans, the interest is fixed, while for a loan against property the rate can be either fixed or floating. A fixed interest rate is better since there is no risk of having to pay more due to the appreciating rate of interest.
3. Eligibility criteria
The next thing you have to determine is whether you qualify for a particular loan. For gold loans, there are hardly any requirements. If you own gold, you are eligible for such a loan against the said gold articles. On the other hand, lenders will want extensive documentation of age, income, property papers, stability and credit history, if you apply for a loan against property. Therefore, the procedure for gold loans is more convenient and fast. Furthermore, online gold loan application has made the procedure even simpler.
4. Repayment tenure
Repayment tenure refers to the duration that the lender allows for repayment of the loan. In the case of gold loans, this tenure is limited to just one year. However, for a loan against property, you can opt for repayment tenures of up to 20 years. Keep in mind that lower tenures will result in greater monthly instalments, and vice versa.
Keep these factors in mind before taking one of the loans. You need to consider your requirement and specific situation before taking a decision. However, gold loans are better if the amount is limited, while loan against property is recommended if you need a large chunk of money.
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