Gold Loan or Personal Loan? Which is better?

Whenever there is a need for cash, we start hunting for the best source from where we can get some cash. And the first source of cash that comes to our minds is Bank or any Financial Institution. But most of us fail to know which type of loan category we fit in. To be put simply, we do not come to know about the loan or type of loan scheme we should apply for to get some cash or loan.

Financial Institutions provide multiple types of loan based on the loan requirements of customers for instance Business Loan, Home Loan, Car Loan and others. But what should one do when there is no requirement of any specialized type of loan.  

The reason being that the loan that you are looking for may not be of any specialized type, it simply may be required to meet some immediate expenses. It may be required for debt consolidation, purchase of any item, planning a vacation, marriage expense, medical needs or any other.

For such expenses, Financial Institutions provide Gold Loan and/or Personal Loan. Both have their unique specialty. Some of them are listed below to help you choose the right Loan for you.

What does Gold Loan has to offer? 

1. You can get a higher loan amount: With application for Gold Loan your chances of getting higher loan amount increases. The simplest reason being that you pledge your Gold as a collateral.  The maximum limit is upto 1 crore, depending on the gold you pledge. Along with higher loan amount you can get a loan against gold with a minimum amount of Rs. 1000.

2. Credit History is not required: This is one of the USP of availing a Gold Loan; you do not need to have a credit history or any credit score. Even if your credit score is low you shall be granted the loan. As the lender can recover the money by selling your gold

3. Minimum documentation: Only basic KYC documents are required while taking a loan against gold and there are flexible repayment options. With minimum paper work the loans are sanctioned instantly in less than 5 minutes and disbursed within 30 minutes. It's an over the counter (OTC) product; walk in to a branch with gold ornaments and walk out with cash

4. Interest Payment: It has the option of interest payment for the entire tenure of the loan and principal payment can be made at the time of loan closure.

5. Money circulation: By availing the gold loan, with lesser interest the amount blocked by way of gold can be brought for circulation and can be handy for all your needs.

6. Gold Loan Schemes: Fedfina offers a wide variety of Gold Loan Schemes to choose from depending on your loan requirement. You can simply choose to apply for a Gold Loan from Fedfina or choose from Fedfina 's Gold Loan schemes

What does Personal Loan has to offer? 

1. No collateral required: You do not have to mortgage anything for availing a personal loan

2. Credit History: You credit history is taking into consideration while lending you a loan. Your loan amount and eligibility depends on your credit score

3. Loan amount: The maximum loan amount that you shall be granted is Rs. 40 lakh and the minimum cap is Rs. 5000

4. Documentation: Application for Personal Loan requires detailed documentation like address and id proofs, income proof, bank statement etc.

The final decision rests on the borrower as to which type of loan shall suit him depending on his requirement and repayment capacity.