Life is unpredictable at times, and people seek financial safety to rely on. Often, the only dependable way to cover such contingencies is by applying for a loan. Whether you are in need of funds for a medical emergency or for urgent travelling, a personal or gold loan stands as a lifesaver. Even though there are multiple kinds of loans available in the market to fulfil your unique needs, gold loans and personal loans are the most popular ones.

Now, the question arises, how and when to choose between a gold loan and a personal loan? To help you make the right decision, this article takes you through a comparison of a gold loan and a personal loan.

Understanding A Gold Loan:

A gold loan is a type of loan under which you pledge your gold assets in the form of coins, jewellery, or ornaments as collateral. According to the weight and purity of the gold you provide to the lender, your loan amount is decided. It is calculated on the basis of the loan-to-value ratio. A gold loan app for self employed people also gives you the option to repay your gold through EMI. 

Once you repay the complete loan amount via the gold loan app for salaried individuals, the lender returns your gold ornaments or jewellery that was deposited as security. Most people get confused about whether a gold loan is unsecured or secured in nature. Since a gold loan is provided by the lender against collateral, which is your pledged gold, it is a secured loan.

Why Choose A Gold Loan?

When you search for ‘gold loan apply online’ and proceed with the same, you get to experience the following benefits:

• Unlike different types of secured loans, such as a car or a home loan, a gold loan does not come with any restriction on the usage of its funds.
• Most of the financial institutions, banks and online lenders provide a gold loan against gold jewellery at affordable rates of interest.
• The loan approval and disbursal procedure is hassle-free and swift.
• You do not require a strong credit history to approve your loan.

Understanding A Personal Loan:

A personal loan is a type of unsecured loan. Under this, you need not provide any collateral to the lender to avail funds. As long as the lender acknowledges your creditworthiness, you are eligible for a personal loan. On the basis of the policies put forward by the lender, you must prove your eligibility regarding your repayment capacity, income, credit history, and nature of employment, among many other factors.

Why Choose A Personal Loan?

To experience the benefits given below, you can apply for a personal loan:

• To get a loan from the lender without any collateral or security deposit, you can prefer a personal loan, as it is a less risky financial assistance.
• As compared to other unsecured loans, such as credit cards, personal loans come with affordable rates of interest.
• You can use a personal loan to consolidate smaller, high-interest debts by bringing all outstanding payments into a single payment made monthly.
• You can use a personal loan to enhance your credit score if you have multiple types of existing credits

Conclusion:
Borrowers are always in a dilemma when selecting between gold and personal loans. Gold loans are a secured type of loan and come with an affordable gold loan interest rate. On the other hand, personal loans are unsecured loans and come with a higher interest rate when compared to gold loans. Both loans can help you manage important and urgent expenses. All you need to do is study carefully about both types of loans and make the right choice, aligning with your loan requirement and repayment capacity.