The most common types of loans are Instant loans and Gold loans. These loans can be acquired immediately within a few hours. There was a greater need for secured and unsecured loans in the pandemic. People thus turned their attention to instant personal loans to cope with their financial crunch. Those with gold assets used the gold loan option to manage their expenses.
Instant Loan Vs Gold Loan
Many people get confused between the two. So, here are some pros and cons of the instant loan vs. gold loan in detail. This will help the borrowers make an informed decision.
Interest Rate
INSTANT PERSONAL LOANS -most of these loans offer attractive interest rates. They also have low processing fees. However, instant loan interest rates vary from lender to lender. This means the interest rate may vary depending upon our credibility and income. It can also be repaid flexibly within the given tenor.
GOLD LOAN- if you repay the loan in a shorter duration. It also offers a lower interest rate against the collateral submitted as a gold loan is a secured loan.
Security
Instant Loans- it does not require any security or guarantor as collateral-free. Thus, the borrower can easily avail the loan without pledging their asset. The only collateral required to approve an instant loan is a stable monthly income.
Gold Loans- wondering how to get a gold loan? Being a secured loan, a gold loan requires gold assets as collateral. It also has a high margin. A loan of 75% of the value of the borrower’s gold is sanctioned by the lenders. The collateral is kept by the lender till the loan amount is completely paid off by the borrower.
Repayment tenor
Instant Loans- It has a flexible tenor. This means it can be repaid as per your suitability. The tenor duration is from 6-24 months. However, it can also be customized using the loan EMI calculator during the loan application process.
Gold Loans- the repayment tenor in the gold loan is subjective to the lender. The EMIs must be cleared in a specified period based on the lender’s repayment rules.
Disbursal and approval time
Instant Loans- these loans are easily accessible through official websites. It does not require the borrower’s physical presence. As the name suggests, Instant loans are approved and disbursed directly into the borrower’s account within a few minutes.
Gold Loans- if you look at the gold loan details, you will find that it is a time-consuming process. The borrower must visit the financial institution to submit the required documents and the gold asset. The chances of approval depend upon the lender like meeting all the criteria. However, there are chances of rejection or reapplication if you do not meet all the criteria.
Eligibility Criteria
Instant Loan
- 21-58 years of age
- Income proof with a minimum salary of Rs. 15,000 per month.
- Mandatory bank statement of 6 months
- Address and identity proof Aadhar card, Pan card, Smart Card Driving license)
- Indian Nationality
Gold Loan
- 21-70 years of age
- No income proof required
- Address and identity proof AadhaAr card, Pan card, Smart Card Driving license)
- Indian citizenship
- Credit score is not required
Let us now look into gold loan details. If you want to withdraw your gold ornaments, there is a fixed time limit. You need to repay the principal amount within that period. You will have to renew the loan agreement if unable to repay the loan amount within the tenure. You will also have to continue with the EMI on the charged interest rate.
The gold loan amount per gram today is Rs. 3,354 for 22-carat gold, Rs. 3,049 for 20-carat gold and Rs. 2,744 for 18-carat gold.
Thus, if you are looking for a long-term repayment, an instant personal loan seems a better option. It is available at an affordable interest rate with a customized loan amount, EMI, and tenure. Gold loans are collateral-based so failure to repay will ultimately lead to gold being sold off. This is done by the lender to recover the sanctioned loan money.
However, the advantages of gold loans cannot be ignored either. The biggest benefit of a gold loan is that it does not require income proof. Thus, anyone can apply for gold loans whether earning or not. People who are eligible for an online gold loan can even get the loan amount in just a few minutes. Considering all the above points, an informed choice must be made as per the needs and convenience of the borrower.
Author:- Vikas Choudhary
https://rupeek.com/blog/things-to-know-about-gold-loan-renewal/If you have repaid your loan amount in full along with the interest, you can take out another gold loan with the same lender, pledging the same gold assets.
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