In times of financial emergency, people tend to apply for personal loans. Such loans are designed specifically to help you in times of economic crisis. However, because of the high-interest rate, they can be prohibitively expensive. Moreover, what if you cannot qualify for a personal loan? Do you have to take out a personal loan if the amount you need is much higher than you are eligible for?
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Monday 10 Feb. 2025
If you are in such a situation, you might consider using your accumulated funds to get out of the financial bind. It may not always be profitable to liquidate assets such as mutual funds and fixed deposits. What is the best way to handle the situation? They are a great option if you are looking for gold loans or loans against properties (LAPs). You have come to the right place if you’re wondering which one of the two will be more profitable in your situation. To help you get the gold loan we have pitted the two secured loans against each other in this blog. So without wasting any further time lets compare the two vital modes of secured loans straight away.
1. Liabilities
Secured loans are referred to as such because they are secured by an asset that acts as collateral, which lenders hold until the loan amount (including interest and other fees) is repaid. Your lender can recover the outstanding loan amount if you cannot repay the loan for any reason.
Because both gold loans and loans against property are secured loans, you will have to pledge an asset to the lender as collateral to obtain them. If you wish to receive a gold loan, you must commit gold articles in the form of jewelry or coins. On the other hand, you must mortgage your commercial or residential property to qualify for LAP.
2. Amount of Interest
For all potential borrowers, the interest rate is the most critical factor. Loans against gold are offered at fixed interest rates, whereas loans against property are offered at selected floating interest rates. The interest rates on gold loans vary from 9.24% to 26%, while the interest rates on loans against a property usually range from 9.6% to 11.5%.
3. Eligibility requirements
To qualify for a loan, you must meet specific requirements. The lender does not care much about the applicant’s profession, credit score, etc., regarding gold loans. This benefits all potential borrowers, especially during a sudden cash crunch when they are more likely to get their loan applications approved. Most lenders will approve gold loans to anyone between 18 and 75 years of age, provided that the gold ornaments or coins they pledge meet the lender’s specifications.
On the other hand, LAP eligibility criteria are more stringent than gold loan eligibility criteria. Different lenders have different criteria for approving a loan application. Still, a few standard parameters that all lenders take into account before approving a loan application include age, income, property value, existing obligations (if any), and stability or continuity of a business.
4. Loan approval time
Gold loans are quick and easy to obtain, making them an excellent financial solution when cash is needed urgently. Documentation is minimal because its eligibility criteria are lenient, which helps speed up the loan application process. Almost like an instant loan, you can get approval on a gold loan within a few hours.
In contrast, the loan processing time for a gold loan is longer than that of a LAP. Lenders must verify all documents related to the property before the loan can be processed. In addition, if more than one owner owns the property, they must submit a No Objection Certificate to obtain the loan, which may lengthen the processing time.
5. Renewal Period
The repayment term is when you must repay the borrowed funds to the lender. In general, the longer the loan repayment period, the shorter your EMI will be, making it easier to repay the loan. However, the total interest payable will increase by selecting a more extended repayment period.
Gold loans are repayable in a year. By contrast, LAPs are generally repaid over 20 years. Gold loans have high gold loan emi since their repayment tenure is short. Thus, this loan is ideal for people who need a small amount of money. LAP is a better option if you need to borrow a significant amount. With its long repayment period, your EMIs will be short, and you will be able to pay back the borrowed money more quickly. So, if you want to calculate the interest rate of your gold loan to manage your EMI according to your income, Rupeek provides the gold loan calculator facility which you can checkout anytime online on their sites.
Conclusion
Whether a gold loan or a loan against property will benefit you depends on your individual needs. Almost every household possesses gold. In the market, gold is very liquid and is of high value. The gold loan has a short repayment period, suitable for a small loan amount. LAP does not incur high-interest rates, and it also has long repayment terms, so it is ideal if you need to borrow a large amount of money. Although if you are looking for a gold loan company, then Rupeek is the best gold loan provider company in the market that provides affordable gold loans.
