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Why Prefer Gold Loan over a Personal Loan?

  • February 23, 2017
  • rootroot

Loans provided by banks or non-financial institutions have been of great help to the populace. They help fulfill a variety of financial needs, without having to liquidate or sell any assets. A Personal Loan is one of the most popular loan options when it comes to miscellaneous needs; but if you are on the lookout for a Personal Loan for some quick financial assistance, we would suggest that you consider Gold Loans as well. That is because Gold Loans offer a number of advantages over a Personal Loan.

The main difference between a Gold Loan and a Personal Loan is that a Gold Loan has collateral that is placed with the loan provider, while a Personal Loan has none. In other words, a Personal Loan is unsecured. The key advantages of Gold Loans over Personal Loans are as follows:

Higher Principal Amount

When you apply for a Personal Loan, the total amount that you are eligible to borrow depends on your monthly salary. But with a Gold Loan, the amount (Loan to Value) can go up to 75 per cent of the collateral. Therefore, with a Gold Loan, you can take any amount as a loan, irrespective of how much you earn, as long as you can provide collateral to match the value.

Quicker Disbursement

Owing to the fact that a Personal Loan does not have any security placed with the lender, the processing involves going over the credit risk and the finances of the loan applicant thoroughly, before deciding to approve the application. This obviously takes time. On the other hand, a Gold Loan depends on the gold that you offer as security. There is hardly any time required for a Gold Loan. You hand over the gold, wait for its value to be ascertained, fill a few forms, and walk away with the loan sanctioned.

No Processing Fee

Personal Loans require a lot of checking. The banks/lenders need to scrutinize your income proof and your financial standing. They generally charge a processing fee that may vary from 0.5 – 2 per cent of the total loan amount. This is not so with Gold Loans, as there is no requirement for income proof. In fact, most Gold Loan providers charge zero processing fees.

Lower Interest Rates

The gold interest rates vary with each provider, and are based on the time period for which you wish to take the loan. But mostly, Gold Loan interest rates are lower than Personal Loan rates. Also, Gold Loans can be taken for as low as 1 month, which is not the case with Personal Loans.

No Prepayment Charges

Personal Loans are repaid through EMIs that span over a period of time. If you, at any time, wish to pre-pay any amount of the loan, you will be subject to a pre-payment fee that could be somewhere around 2 per cent of the outstanding principal amount.

But in case of Gold Loans, you can repay any amount at any time and even close the loan account whenever you want to, without accruing any pre-payment fee.

Therefore, Gold Loans can be a better alternative to Personal Loans, offering you the same freedom to raise funds for your personal use, and at the same time, costing you less.

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WHY US

We are India's No.1 - Most Trusted Financial Services Brand, according to the Brand Trusted Report, 2017 & 2016 consecutively. We are also the largest Gold Financing Company in India in terms of loan portfolio, according to the 2015 update to the IMaCS Research & Analytics Industry Reports, Gold Loans Market in India, 2015 ("IMaCS Industry Report, (2015 Update)"). We provide personal and business loans secured by gold jewellery, or Gold Loans, primarily to individuals who possess gold jewellery but could not access formal credit within a reasonable time-frame, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements.

  • 25000

    Employees

  • 4500+

    Branches spread over 21 states and 4 Union Territories

  • 6 million

    Customers in our portfolio

  • 131 year

    Existence