Gold Loan vs Personal Loan

Loan helps you in many ways. Whether you look forward to having quick cash to buy a new car or renovate your house, there are two options you can always rely on – gold loans and personal loans. Both these loans have their unique features and benefits and are suitable for different financial situations. In this article, we will learn about gold loans and personal loans in simple terms and compare their pros and cons in different aspects. 

What is a Gold Loan?

A gold loan is a secured loan where you provide your gold ornaments or coins to a lender in exchange for money. The loan amount you would get is usually a percentage of the gold’s value.

How Gold Loans Work

The lender evaluates the gold’s purity and weight to determine its market value. Now based on the valuation, you can get a loan, usually ranging from 60% to 90% of the gold’s value. Once you have got the loan, you repay it in instalments or as a lump sum, with interest. Once repaid, you get your gold back.

Advantages of Gold Loans

• Since the loan is secured by gold, approval, and disbursal are usually fast.
• Interest rates on gold loans are generally lower compared to unsecured loans.
• Your credit score is less critical because the loan is backed by gold.

Disadvantages of Gold Loans

• If you fail to repay the loan, the lender can auction your gold to recover the loan amount.
• The loan amount you may get is restricted by the value of your gold.

What is a Personal Loan?

A personal loan is an unsecured loan you can use for various purposes such as medical emergencies, home renovations, or debt consolidation. As it doesn’t require collateral, the approval is usually based on your credit score and history.

How Personal Loans Work

You first apply for a personal loan with a lender and provide your financial details and credit history. Now, the lender evaluates your credit score, income, and other factors to determine your eligibility. Based on their assessment, the lender would offer a loan amount with specific terms, which would include interest rate and repayment period.

Advantages of Personal Loans

• No Collateral Required: You don’t need to provide any assets to get the loan.
• Flexible Use: You can use the loan amount for any purpose.
• Larger Loan Amounts: Depending on your credit score and history, you can get a significant loan amount.

Disadvantages of Personal Loans

• Since personal loans are unsecured, interest rates are usually higher.
• Approval and terms depend heavily on your credit score and history

Also Read: Top 7 Benefits of Personal Loan You Must Know

Gold Loans Vs Personal Loans

Gold Loan Vs Personal Loan Interest Rate

Gold loans generally offer lower interest rates due to the secured nature of the loan, while personal loans are higher as they are unsecured.

Gold Loan Vs Personal Loan Processing Time

The processing time for gold loans is faster, as the loan is secured by the gold you have provided. However, personal loans can take longer due to the need for a detailed credit assessment.

Gold Loan Vs Personal Loan Risk

With gold loans, there is a risk of losing your gold if you default on the loan. However, it is not the case with personal loans. Here, there is no risk of losing an asset, but it can affect your credit score negatively if you default.

Airtel Personal Loan

Airtel offers instant loans through its Airtel Thanks app, which provides a quick way to access funds during times of emergencies.

Features of Airtel Personal Loan

• Easy Application: You can apply for the loan directly through the Airtel Thanks app.
• Instant Approval: The loan approval process is quick, and the amount is disbursed rapidly, usually within 24 hours.
• No Collateral Required: As with other personal loans, you do not need to provide any collateral.

Benefits of Using Airtel Personal Loan

• You can manage your loan application and repayments directly from the Airtel Thanks App.
• Airtel offers competitive interest rates compared to other personal loan providers.
• You have the freedom to choose from various repayment plans that suit your financial situation.

When to Choose a Gold Loan

A gold loan would be a better option for you if:

• You Need Quick Cash
• Lower Interest Rates are Crucial
• You Have Poor Credit

When to Choose a Personal Loan

You should avail a personal loan if:

• You Need a Larger Amount
• No Collateral Available
• You need the loan for diverse purposes

Also Read: What are Paperless Loans? How to apply?

Conclusion

So, both gold loans and personal loans have their advantages and drawbacks, and the best choice depends on your specific needs and circumstances. If you have gold and need quick, lower-interest funds, a gold loan is a solid option. For larger amounts without collateral, a personal loan is more suitable. You can use the gold loan vs personal loan calculator to determine how much you need to pay every month.

Now, if you are looking for an easy and convenient personal loan option, then consider the Airtel personal loan available through the Airtel Thanks app right away.