There are times when people may need financial support, especially during instances when they need money quickly. There are two types of loans that can help one make a good decision and get themselves out of the cash crunch. One can utilize the gold kept in their locker to take a gold loan or consider taking a personal loan.
Gold Loan
Gold loans are a type of secured loan wherein one pledges the gold assets to borrow a certain percentage of their value. Once the loan is approved and disbursed, one can repay it according to the accepted terms and conditions. When fully repaying the loan, the lender returns the gold. The best part is that the borrower's credit score does not impact the loan approval because gold acts as collateral. To get a gold loan, simply take gold assets to a reputed bank or non-banking financial company (NBFC) for their value assessment.
Personal Loan
Personal loans, or signature loans, are unsecured loans, which means one does not have to provide collateral. Unlike gold loans, the approval process for personal loans takes time because banks and NBFCs assess the credit history of the borrower. They also consider the borrower's monthly income for the amount they need to borrow. Moreover, personal loans differ from gold loans in terms of approval time. Banks and NBFCs take some time to assess the borrower's credit history before sanctioning the loan. This ensures a clear understanding of the borrower's credit payment history, making credit history a critical factor in the loan approval process.
Gold Loan Vs. Personal Loan
Documentation
When applying for gold loans, individuals only need to provide basic documents like ID and address proof for the Know Your Client (KYC) process. Lenders do not ask for income proof or bank statements to validate their eligibility. On the other hand, one may need to submit payslips/ITR forms, credit scores, and other necessary documents for a personal loan.
Principal Amount
The principal amount of a gold loan is decided by the total value of the gold assets pledged by the borrower. Banks and NBFCs provide gold loans based on the current market price of the gold, taking into account its purity and weight. The amount calculated on the basis of gold loan per-gram value and purity. In contrast, the borrowing amount relies on the borrower's credit history and monthly income for personal loans.
Processing Time
Gold loans are quickly disbursed within a few hours or minutes, depending on the value of the gold provided as security. However, personal loans take longer time to process because they require thorough document verification as there is no collateral involved.
One can take a gold loan from a renowned financial institution with easy terms and conditions. Individuals looking for a gold loan can check out Muthoot Finance or any other NBFC’s gold loan per gram rate and schemes by visiting their official website. One can register for a home visit today and get a gold loan from the comfort of their home as well.
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