A gold loan is a secured loan that is secured by a gold object or things. Because of its immediate availability, it is the most desired borrowing choice in times of need. Even with so many investment and financing choices accessible in the market today, the relevance of a loan against gold cannot be overstated. A gold loan is a fantastic chance for meeting an urgent financial need. It also serves as a Credit Health Tonic, as you may establish your credit history simply by storing your gold in a locker or safe and obtaining a simple low-interest loan.
A personal loan on the other hand, is an unsecured loan that you can obtain without submitting any security. You can apply for a personal loan for a variety of reasons, including marriage, education, medical emergencies, travel, house improvement, and so on. Personal loans are available to both salaried and self-employed individuals. The loan has low interest rates and flexible repayment choices. It is beneficial to check the Gold Rate in India before taking any decisions. Moreover, you can apply online or in a bank or non-banking finance company branch (NBFC). You must additionally pay the processing charge at the appropriate rates. The lender will determine loan eligibility based on your income, credit score, and ability to repay. Following receipt of your application, the lender will get your credit record from CIBIL or another credit agency. The lender will disburse the loan amount in your bank account once you meet the eligibility criteria.
Unlike gold loans there are various types of personal loans available in the market. Some of the types of personal loans are as follows:
Wedding Loan
You may use this loan to cover all of your wedding expenditures, which might range from guest accommodations to purchasing jewellery for the big day. Lenders may provide unique deals on this loan type.
Travel Loan
Travelling is still on everyone’s mind. However, we frequently run out of money to assure the same. This is when you can take advantage of a travel loan. It gives you the finances you need to fulfil your excursion dreams.
Consumer Durable Loans
It differs from other sorts of personal loans. This loan covers up to 80%-90% of the buying price of the consumer durable. As a result, it is not fully funded, as opposed to other loan kinds where a 100 percent financing is available if you have the requisite income, credit score, and payback ability.
Home Renovation/Improvement Loan
This loan can be used to renovate or extend your current dwelling unit.
Medical Emergency Loan
Dealing with a medical emergency might be difficult if you don’t have any cash to spend on it. Banks and NBFCs would provide you with a medical emergency loan to help you recover from this. If everything goes as planned, the bank might grant you loan and disburse the loan amount faster than other forms of personal loans.
Festive Loan
Festivals are observed in India with zeal. Keeping this in mind, lenders provide intriguing festive loan offers for consumers in need of cash throughout the holidays.
Which Loan will help in Improving your CIBIL Score?
If you have a low CIBIL score, a gold loan might be able to assist you in improving your CIBIL score. This is achievable since a gold loan is a secured loan that, when contrasted to an unsecured personal loan, helps to boost your CIBIL score. You can even avail a gold loan without any income proof. All you have to do is submit your KYC documents and the gold item. As a result, you can take out a small loan and return it on a regular basis to improve your CIBIL score over time.
Is a Gold Loan better than a Personal Loan?
There is a huge demand for gold as well as for a gold loan in the country. Also, there are numerous benefits to a gold loan that make it superior to unsecured personal loans. Here is a list of the advantages:
- A gold loan is a secured loan that can help you improve your credit score, which is not possible with an unsecured personal loan.
- Gold acquisition is the optimal asset allocation strategy among Indians, and a loan against gold is the greatest approach to maximise its potential due to the high LTV ratio of up to 80%.
- Most lenders release it within 60 minutes, however it takes around 2-5 working days to issue a personal loan.
- A gold loan has an interest rate of 9.15 percent per year, but a personal loan has an interest rate of 11 percent per year.
- Income evidence is not necessary for a loan against gold, unlike a personal loan, when it is the most crucial document.
- Unlike a personal loan, a gold loan does not place much emphasis on CIBIL score, therefore even CIBIL defaulters can obtain a gold loan.
- A gold loan provides you with lending alternatives that are flexible and renewable.
- A gold loan has a three-month repayment period, whereas a personal loan has a twelve-month repayment period.
- It aids in the gradual improvement of your credit score.
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