Gold Loan vs Personal Loan: A Perfect Battle, Which one is Better
In our minds, there will always be questions about which is a better loan service: a gold loan or a personal loan. Let me clear your doubts and give you a brief description and differentiation of a gold loan from a personal loan.
There is no fixed time when you face a financial issue, so we take out a loan to fight this financial issue and remove such contingencies. You need funds for your sister’s marriage, or you will pay for medical issues. Loans are lifesavers, and there are varieties of loan options available in the market, but these two methods are the best and most popular.
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Let’s discuss gold loan vs personal Loan interest rates and the basic differences between both loans.
What is a Gold Loan
If we talk about gold loans, then, gold is referred to as the most valuable asset. It can be in the form of jewelry or coins, and you can use this gold as collateral and take the loan amount. Most of the time, the loan amount is given up to 75 to 80 percent of the total value of your gold, and the loan amount is calculated based on the loan value.
You can pay your loan amount as a monthly installment, and once you clear your loan, the gold will be returned to you. But the question is whether it is secure or not, and you can use this gold as collateral and take the loan amount. Most of the time the loan amount is given up to 75 to 80 percent of the total value of your gold, and the loan amount is calculated based on the value, You can pay your loan amount in monthly installments and once you clear your loan, the gold will be returned to you. But the question is that it is a Very secured loan
Advantages and Disadvantages of Gold Loans
Advantages of Gold Loans
- There is no restriction on the end. Gold loans are very suitable for those who want a small loan.
- Lots of Banks offer Gold loans at affordable interest rates
- The loan approval process is also easy and hassle-free.
- You don’t need to have a good credit score.
Disadvantages
When you are not able to repay your loan, the lender will uphold the legal right to liquidate your gold to recover their money.
The availability of the gold loan depends on the LTV ratio, which varies from lender to lender. The maximum amount of gold you can get is 80% of the total value of your gold. For example, if your gold has a 10 lakh market value, you will get 8 lakh.
What is a Personal loan?
A personal loan is also known as an unsecured loan because you do not need to provide any collateral to get funds. This type of loan is fully based on your credit score, and the interest rate of this loan varies from lender to lender. You are eligible for this loan based on your income and repayment capacity.
Advantages
- One of the best advantages of this loan is that you don’t need to deposit any collateral; it is a risky form of financing.
- Interest rates are lower than other unsecured loans like credit cards
- Personal loans can help increase and improve your credit score.
Disadvantages
- It has fees and other penalties which can increase the cost of borrowing.
- It depends on your credit score if your credit score is poor, then you will not get the loan
- If you miss any monthly installments, then it will be problematic for you to get other loans.
Conclusion:-
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