gold loan vs personal loan: which one is better to have?

with covid-19 in our lives, the job cuts and layoffs are innumerous, making borrowings a very common way of overcoming these temporary financial troubles. in case of any short term cash crunches, personal loans or gold loans can prove to be very useful and handy.

personal loans are usually unsecured loans, i.e. you do not need any asset to back the loan. the only thing that matters when you’re taking a personal loan is his/her credit history and income. since these are riskier than other forms of loans, they usually attract a relatively higher interest rate.

on the other hand, a gold loan or loan against gold is essentially a secured loan given against the asset, i.e. gold jewellery. as per the rbi guidelines, a gold loan can presently be issued only against gold jewellery and not against coins or bars and only at 75% value of the total. since this is a secured loan, the risk level is much lower, thereby attracting lower interest rates. 

whichever suits your financial needs should guide your decision. other than that, there are various factors on which these vary. hence, you must be thorough about the advantages and disadvantages of both options before finalising one.

now that you’re aware of all the guiding factors for personal and gold loans, it should not be that difficult to choose and finalise. meanwhile, if you’re exploring options of paying back in emi, you can check out the emi calculator by CRED to make your decision easier.