Gold Loan Vs. Personal Loan – Which Is The Best To Opt For?

Nov 22, 2020

Gold Loan Vs. Personal Loan – Which Is The Best To Opt For?

A personal loan or a gold loan can be convenient options to help you fund any purpose or requirement you may be facing. Both have short processing times, do not restrict the end usage of the loan amount and are easily accessible.

However, there are some aspects that you must be aware of when considering a gold loan vs a personal loan.

What is a Gold Loan?

A gold loan or a loan against gold is a secured borrowing option wherein a borrower takes money from a lender by pledging gold assets such as gold ornaments. These assets act as collateral. Since the asset is highly valued, the loan-to-value (LTV) rate is typically also high. This can be checked with ease with a gold loan calculator. Moreover, since the loan is backed by a collateral, interest rates are usually lower compared to unsecured loans.

What is a Personal Loan?

A personal loan is most often an unsecured loan from a bank or financial institution for a fixed period. A personal loan can be used for any personal purposes. However, since this loan is unsecured, it usually has high documentation requirements and credit background checks. Interest rates will depend on your loan duration, creditworthiness and amount.

What Can They Be Used For? Gold loan vs Personal Loan

Both gold loans and personal loans do not restrict the end usage of funds. This means that you can use the money from these loans for any lawful activity. People use the money from these loans for a variety of financial emergencies:

  • Hospital and medical payments
  • Purchasing household appliances or necessities
  • Renovating a home
  • Travel
  • Marriage
  • Purchasing a vehicle
  • Starting a business

Which is Better, Gold Loan or Personal Loan?

Before concluding which is better, gold loan or personal loan, let us consider some essential differences between the two, such as duration of loan, documentation and gold loan interest rate vs personal loan interest rate.


To be eligible for a gold loan, you need to be at least 18 years of age and need gold assets to pledge.

A personal loan also requires the applicant to be at least 18 years. You need to have steady employment or show proof of business income. Some banks also ask for a minimum income. Personal loans also require a minimum credit score, usually around 750.

Interest Rate

Interest rates on gold loans are lower than personal loans because they are backed by collateral. It ranges from 6%-15%, depending on the bank and quality of gold assets.

Since personal loans do not have a security back-up, interest rates are usually high, ranging from 10% to as high as 36%, depending on the loan amount and your credit score.

Loan to Value

Loan to value ratio is the proportion of loan amount a borrower is eligible for with regard to the asset. Usually, LTV for gold loan is up to 75% of the prevailing asset market value.

Since income is one of the criteria for a personal loan, you may be eligible for a loan value up to 30 times your monthly income. Some banks may offer a lower LTV depending on your pre-existing loans and credit score.


Gold loans are short-term loans with tenure ranging from 3 months to 36 months.

Personal loans can be availed for a duration of up to 5 years.


Documentation needs are minimal, requiring only a filled application form and KYC updates.

Personal loans require proof of income and income tax filings in addition to filled application forms and KYC.

Disbursal Time

Gold loans are disbursed almost instantaneously after submitting assets. They can be deposited in your bank within an hour.

Personal loan disbursal may take up to 7 days.

What Should You Choose?

Based on these features, it may become simpler to ascertain the advantages and disadvantages of gold loan vs personal loan. While your financial requirements and availability of collateral may dictate which option is the best bet for you, there are a lot more gold loan benefits.

Gold loans can turn out cheaper when you compare gold loan interest rate vs personal loan interest rate. The documents required for gold loans are also fewer, the processing time is fast and disbursal is almost instant. For short-term financial emergencies, gold loans can be a blessing.

Rupeek’s online gold loans are transforming the loan experience for customers, with high loan amounts, instant money transfer and loan sanctions, and low interest rates, all from the comfort of your home with doorstep services.

Rupeek’s services are designed to meet any and all urgent money needs. Doorstep services are also available to make the loan process as convenient as possible. Apply for a gold loan with Rupeek and get a loan that will be completely hassle-free.

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