Personal VS Gold Loan: Personal or Gold Loan, which is the better option, understand the difference between the two here

New Delhi: When money is needed urgently, the loan option comes in handy. However, the question arises that which option between personal loan and gold loan can be considered better.

The difference between these two loans can be explained by factors like loan approval, interest rate, loan amount, loan repayment period etc.

Based on all these factors, you can choose the better option for yourself between the two loans. Which of the two loans is better for you, you can understand through this article-

loan approval

Factors like a person's credit score, monthly income, work profile are important when talking about a personal loan.

On the other hand, gold loans are called secured loans because in such loans the gold jewelery can be sold in case of loan default.

If your credit score is bad then it becomes a bit difficult to get a personal loan, in such a situation gold loan comes in handy.

Rate of interest

The interest on personal loans is decided based on the credit profile of the borrower and the credit pricing policy of the lender.

It usually starts at an annual rate of 10.5 percent. However, some public sector banks also offer loans at lower interest rates.

Whereas, in case of gold loan, it is based on the loan repayment time, amount and repayment option.

If you have a good credit profile, the interest rate for both the loans is the same.

Also, the interest rate on gold loans may be slightly lower than personal loans for people with poor credit scores.

loan amount

With a personal loan, a person can meet his financial needs ranging from Rs 50 thousand to Rs 15 lakh.

However, in some cases this amount can range from Rs 30 to Rs 1 lakh. The loan amount depends on the repayment capacity and tenure of the loan.

On the other hand, in case of gold loan, the loan amount is based on the ratio of the value of gold deposited to the value decided by the lender (LTV ratio).

However, it needs to be understood here that as per the rules of the central bank RBI, the loan to value ratio should not be more than 75 percent.