A gold loan is a secured loan backed by a gold object or items. It is the most popular borrowing option in times of need due to its immediate availability. Even with so many investment and financing options available today, the importance of a loan against gold cannot be overstated. A gold loan is an excellent way to meet an urgent financial need. It also functions as a Credit Health Tonic, as you can establish your credit history by simply 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 get without putting up any collateral. It can be given for a variety of reasons, such as marriage, education, medical emergencies, travel, and home improvement. Salary and self-employed individuals can apply for personal loans. Checking your CIBIL Score is important to avoid rejections on your loan applications. The loan has low interest rates and a variety of repayment options. Before making any decisions, it is a good idea to check the Gold Rate in India. Furthermore, you can apply online or in a branch of a bank or non-banking finance company (NBFC). You must also pay the processing fee at the appropriate rates. Your loan eligibility will be determined by the lender based on your income, credit score, and ability to repay. The lender will obtain your credit history from CIBIL or another credit agency after receiving your application. Once you meet the eligibility requirements, the lender will deposit the loan funds into your bank account.
Personal loan, unlike gold loan, is available in a variety of forms on the market. The following are some examples of personal loans
Wedding Loan- You can use this loan to cover all of your wedding expenses, which could include everything from guest accommodations to wedding jewellery. Lenders may offer special deals on this loan type.
Travel Loan- Everyone is still thinking about travelling. However, we frequently run out of funds to do so. This is when a travel loan can come in handy. It provides you with the funds you require to realise your excursion dreams.
Consumer Durable Loans- These are distinct from other types of personal loans. This loan covers up to 80% – 90% of the purchase price of the consumer durable. As a result, it is not fully fund, as oppose to other loan types where you can get a 100 percent loan if you have the require income, credit score, and payback ability.
Home Renovation/Improvement Loan- Use this loan to renovate or expand your current dwelling unit.
Medical Emergency Loan- Dealing with a medical emergency can be difficult if you don’t have the necessary funds. Banks and NBFCs would give you a medical emergency loan to help you recover. If everything goes according to plan, the loan could be approve and disburse faster than other types of personal loans.
Festive Loan- Festivals are celebrate with zeal in India. Keeping this in mind, lenders offer appealing holiday loan offers to consumers in need of cash during the holidays.
Which Loan Would Improve your CIBIL Score?
A gold loan may be able to help you improve your CIBIL score if you have a low one. This is possible because a gold loan is a secure loan, which, when compare to an unsecure personal loan, helps to improve CIBIL score. It is available without requiring proof of income. You only need to submit your KYC documents and the gold item. As a result, you can take out a small loan and repay it on a regular basis to gradually improve your CIBIL score.
Which is Better?
In the country, there is a high demand for gold as well as gold loans. A gold loan also has numerous advantages that make it superior to unsecure personal loans. Here is a list of the benefits:
- A gold loan is a secure loan that can help you improve your credit score, which is not possible with an unsecure 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 a personal loan is often issued within 2-5 working days.
- 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.