Nowadays, Financial Institutions in India are offering various types of loans to meet the financial requirements of customers, mainly to have a larger clientele base. Some institutions are offering innovative credit facilities with novel and attractive nomenclatures. Often customers are confused about selecting the proper facility.
Financial contingencies arise without notice demanding urgent liquid cash. As a spark, the idea of raising money through a Personal Loan or a Gold Loan comes to one’s mind. Which way one should opt? “which loan is better?” is not the question. “WHICH LOAN IS SUITABLE AND SOLVES OUR PROBLEM” is the need of the hour.
Let us examine the Pros & Cons of both:
| PERSONAL LOANS | LOANS AGAINST GOLD | |
| Procedure | May be cumbersome as the verification of the borrower, income criteria, employer’s profile, credit history, etc., will be looked into | Simple. Identification of the borrower only. |
| Disbursal | May take more time as the processing and sanction involves various stages | Could be immediate |
| Security | No Mortgage/Pledge. A third-party guarantee may be insisted | Gold ornaments need to be placed as security |
| Rate of Interest | May carry a higher rate of interest depending upon the profile of the borrower and the tenure of the loan | A fixed rate of interest which will be much lower than the one on personal loans |
SUM UP
While no security is required to be produced for a Personal Loan, Gold Loan requires a pledge of gold ornaments. Other elements like Interest, Flexibility, Speed of Disbursal, Documentation, Processing Charges, Repayment terms, etc., support Gold
GOLD LOANS INTREAST RATES OF TOP BANKS AND NBFCS IN INDIA
| GOLD LOANS/BANKS/NBFCS | INTEREST RATES% |
| HDFC GOLD LOAN | 9.10% ONWARDS |
| UNION BANK GOLD LOAN | 9.25%pa |
| PUNJAB NATIONAL BANK | 9.15%pa |
| INDIAN BANK | 8.80% pa |
| BANK OF BARODA | 9.40% onwards |
| STATE BANK OF INDIA | 8.95%pa |
| ICICI BANK GOLD LOANS | 9.25%pa |
| MUTHOOT GOLD LOANS | 10.90%pa |
| AXIS BANK GOLD LOANS | 8.85% pa onwards |
Comprehensive Comparison of Personal Loan Interest Rates, EMIs, and Processing Fees – 2024
Looking for the best personal loan rates?
| LENDERS | Interest Rates Range | EMI Loan Amount Rs 5.00 Lakhs | EMI Loan amount Rs 1.00 lakhs | Processing Fee |
| SBI | 11.45%-14.85% | 10,984-11,856 | 2,197-2,371 | NIL |
| BANK OF BARODA | 11.15%-18.75% | 10,909-12,902 | 2,182-2,580 | UP TO 2%(MIN. RS 1,000 AND MAX.RS 10,000) |
| FEDERAL BANK | 11.49% ONWARDS | 10,994 ONWARDS | 2,199 ONWARDS | UP TO 2% |
| BAJAJ FINSERV | 11.00% ONWARDS | 10,871 ONWARDS | 2,174 ONWARDS | UP TO 3.93% |
| ICICI BANK | 10.85% onwards | 10,839 ONWARDS | 2,167 ONWARDS | UP TO 2% |
| HDFC BANK | 10.75% ONWARDS | 10,809 ONWARDS | 2,162 ONWARDS | UP TO 4,999 |
| INDUSIND BANK | 10.49% ONWARDS | 10,744 ONWARDS | 2,149 ONWARDS | 1.5% TO 3.5% |
| UNION BANK OF INDIA | 11.3%-15.45% | 10,959-12,013 | 2,192-2,403 | UP TO 1%(MAX.RS 7,500) |
| TATA CAPITAL | 10.99% ONWARDS | 10,869 ONWARDS | 2,174 ONWARDS | RS 101 |
| AXIS BANK | 11.25% ONWARDS | 10,934 ONWARDS | 2,187 ONWARDS | UP TO 2% |
| SOUTH INDIA BANK | 12.85%-20.60% | 11,338-13,414 | 2,268-2,683 | UP TO 2% |
| IDFC FIRST BANK | 10.90% ONWARDS | 10,869 ONWARDS | 2,174 ONWARDS | UP TO 2% |
| KARNATAKA BANK | 13.43% ONWARDS | 11,487 | 2,297 | UP TO 2%(MIN.RS.2,500- MAX.RS.8,500) |
| CANARA BANK | 10.95%-16.40% | 10,859-12,266 | 2,172-2,453 | 0.50% (MAX.RS.2,500) |
| BANK OF INDIA | 10.85%-16.10% | 10,834-12,186 | 2,167-2,437 | 0.50%-1%(MIN.RS.250-MAX.RS. 10,000) |
| KOTAK MAHINDRA BANK | 10.99% ONWARDS | 10,869 ONWARS | 2,174 ONWARDS | UP TO 3.% |
| UCO | 12.45%-12.85% | 11,236-11,338 | 2,247-2,268 | UP TO 1.% |
| PUNJAB &SIND BANK | 10.75%-13.50% | 10,809-11,505 | 2,162-2,301 | 0.50%TO 1.% |
| BANK OF MAHARASTRA | 10.00%-12.80% | 10,624-11,325 | 2,125-2,265 | 1% |
| FEDERAL BANK | 11.49% ONWARDS | 10,994 ONWARDS | 2,199 ONWARDS | UP TO 2% |
| PUNJA NATIONAL BANK | 10.40%-17.95% | 10,772-12,683 | 2,144-2,537 | UP TO 1% |
| HSBC BANK | 9.99%-16.00% | 10,621-12,159 | 2,124-2,432 | UP TO 2% |
Both gold loans and personal loans work wonderfully as financial solutions within India with certain pros to each based on the preference and need of the borrower. Gold loans allow people with gold but little formal credit to use their assets as collateral and access borrowing option that is both easier and faster; also it comes at much lower interest rate. This is good for short-term needs and also offer flexibility in terms of repayment. In contrast, personal loans, as unsecured loans are meant for individuals who have high credit scores and fixed income flow, and need higher amounts of money without going the collateral way. Personal loans tend to have higher interest rates and more qualification requirements, but they are also more versatile when it comes to how you use the loan. Thus, the selection between a gold loan and a personal loan will finally be one which relies on how urgent the need is, what assets you may have after all that can be utilized as safety (in case of a gold loan) or whether you’re incapacitated to avail funds or not because of your credit score.