Instant Loan Vs Gold Loan: What one should choose?In the pandemic, there was a greater need for secured and unsecured loans like home loans, gold loans, auto loans, mortgage loans, instant personal loans, and credit card loans, respectively. To cope up with the financial crunch, many people turned their attention to instant personal loans whereas those with gold assets used the gold loan option to raise immediate money.
Instant personal loans and gold loans are the most common types of loans. It can be acquired immediately within few hours, so, if you are looking for financial help and get confused between the two, here are some pros and cons of gold loans & instant loans before opting for the right option.
Pros & cons of Instant loan VS Gold loan
- Instant loan is collateral-free and does not require any security or guarantor, and can be availed easily without pledging your asset. The only collateral is a stable monthly income for getting an instant loan approved.
- Gold loan requires gold assets/jewelry as collateral being a secured loan and has a high margin. Lenders only sanction a loan of 75% of the value of your gold. This collateral remains with the lender till the loan amount is completely paid off.
- An instant personal loan has a flexible tenure and can be repaid as per your suitability. The flexible loan tenure starting from 6 - 24 months can be customized using the loan EMI calculator during the loan application process.
- Gold loan repayment tenure is subjective to the lender. Based on the lender’s repayment rules, the EMIs are to be cleared in a specific period.
To withdraw your gold ornaments, you need to repay the principal amount within the fixed time limit. If unable to repay the loan amount within the tenure, you will have to renew the loan agreement and continue with the EMI on the charged interest rate.
- Most instant personal loans offer attractive interest rates and low processing fees. The interest rate may vary based on your high credibility and income. Instant loan interest rates vary from lender to lender and can be repaid flexibly within the given tenure.
- On the other hand, a gold loan can be a better option if you repay the loan in a shorter duration with a lower interest rate. A gold loan is a secured loan and therefore charges less interest rate against the collateral submitted.
Disbursal & approval time
- Instant loans are stealing the show as instant loans are just at the tip of your finger on your smartphones or through official websites. It does not require any physical presence. Instant loans are approved and disbursed within few minutes directly into your account.
- Gold loan approval and disbursal is time-consuming, and you have to visit the financial institution to submit your gold ornaments and documents. Depending on your lender, a gold loan can be approved immediately if you meet all the criteria. But if you don’t, there are chances of reapplication or rejection.
So always make sure to choose a lender who is reputed and reliable for quick approval and disbursal, whether for acquiring an instant loan or gold loan.
Eligibility Criteria for Instant loan VS Gold Loan
Instant loan eligibility criteria
- Age limit between 21 – 58 years
- Income proof is required for an instant personal loan with a minimum salary of Rs.15,000/- per month
- Six months bank statement is mandatory
- Address proof and Identity proof like your Aadhar card/Smart card driving license/ PAN card is required
- Indian Nationality
Gold loan eligibility criteria
- Age limit 21 - 70 years
- No income proof is required.
- Minimum KYC documentation like Address proof and identity proof-Aadhar card/Smart Card Driving license/ PAN card is accepted.
- No credit score is required.
- Proof of Indian citizenship
However, if you are looking for long-term repayment, choose an instant personal loan at an affordable interest rate with a customized loan amount, EMI, and tenure.
Since gold loans are collateral-based, failure to repay will ultimately lead to gold being sold off by the lender to recover the sanctioned loan money