India is always known for cultural and emotional factors. Apart from these, it also well known for gold as it is treated as integral part of investments or savings of every household in India. For many years, the gold loan market is dominated by non – banking sector. But from past few years gradually as banks have also started entering in to this loan platform, it has been occupying much of the loan place.
But the question here is How Good is Personal Loan in Comparison to Personal Loans. Let’s see in brief about each of them.
What is Personal Loan?
The personal loan is the loan given by bank considering your income eligibility. It can be used for any purpose like medical expenses, marriage expenses, home improvement, etc.
What is Gold Loan?
Gold loan is given by given on the basis of quantity and its value at that particular period. This can be used for any purpose like business, medical expense, marriage, etc. It is the loan given to any person irrespective of profession.
- To avail personal loan, the bank verifies your income documents and the loan process also charges processing fee which will vary from 0.5% to 1% of loan amount. While gold loan do not ask for processing fee and do not require any of the document except the valuable gold.
- The interest applied on gold loan is very less compared to personal loan. The reason for higher interest rates on personal loan is, it does not have collateral requirement.
- Repayment tenure of personal loan is 1 to 5 years and that you need to pay within these 5 years. But gold loan tenure is just 12 months and if you are in a position to repay the loan with in this 1 year, then you can take the gold loan again for the same gold.
- The personal loan is paid with fixed EMI and if you wish to do pre-payment, then you will be charged for it. The charge for pre-payment varies from bank to bank. Whereas gold loan has no pre-payment charges. You can pay the loan in middle and close the gold loan at any point of time.
- You can EMI option and it will carry on for the whole period along with principal interest. However, in gold loan there is no EMI option and you need to pay only the interest amount.
Gold Loan Over Personal Loan – Which one is the Best One?
When you compare the above points, it is clearly said that Gold Loan is the Best One Compared to Personal Loan. It seems to be less cost and also offers multiple benefits compared to the other one. Hence if you have much gold parked in your locker and you are in requirement of cash, then do not immediately contact the bank for personal loan. Rather contact them for gold loan. You have lot of banks and they are ready to give you the loan on your gold.