Evaluate Personal loan and Gold loan before concluding on financial decisions


During this pandemic situation, people are facing some serious financial crises. When in need of money at short notice, both gold loans and personal loans serve as convenient options. Both the loan options assist individuals to survive through a brief cash emergency, primarily due to salary cuts and job losses. Industry analysts recommend opting for a loan when in need, but evaluate your options well before settling with one. For instance, a personal loan can come with some additional costs on the borrower, whereas gold loans are not only less expensive, they are also instantly available.

While opting for a loan, if you are confused amidst the two options, firstly figure out the term for which you need the loan. George Alexander Muthoot, MD, Muthoot Finance, says, “If repayment of the loan is within a few days or weeks, then a gold loan is a suitable option. If a longer tenure and EMI is the preferred repayment option, then a personal loan is a more suitable option.”

Hence, while settling with the decision and choosing between gold and personal loan options, check the term of repayment, the span of the loan, and also the rate of interest are critical factors. The gold loan does away the trouble of meeting eligibility criteria, and anyone can leverage their gold ornaments and raise a loan immediately. Moreover, eligibility is universal, the person may be a salaried, business person, or a homemaker. Any person who is an Indian citizen, above 18 years is qualified to avail of a gold loan. Analysts say that if there are no income-related documents available, then a gold loan is a better option for an individual.

Praveen Kutty, Head-Retail and SME Banking, DCB Bank, says that “Culturally, investing in gold ornaments with a motive that it helps for a rainy day is inherent in the Indian psyche! Gold ornaments are a handy and smart asset to use as opposed to a personal loan.” Several banks offer gold loans with an overdraft facility. The borrower pays interest for the loan amount utilized, unlike in the case of a personal loan where the EMI is payable on the entire disbursed loan amount.

In the current crisis, gold loans are proving to be good collateral especially for recovery largely for micro SMEs who have an immediate need for capital. One can evaluate the estimated loan amount based upon the gold value, and there is no need for income proof like in case of personal loans.


Please enter your comment!
Please enter your name here