Six things to consider before opting for a personal or gold loan
NEW DELHI: Personal or gold loans are two convenient borrowing options that help people meet urgent financial requirements. A borrower can decide between the two depending on the features that suit them the best.
In this piece, we compare the features of personal loan and gold loan available for customers.
Loan Amount
The personal loan amount usually ranges from ₹50,000- ₹15 lakh, with some lenders claiming to disburse higher amount of ₹30 lakh to ₹40 lakh. The loan amount eligibility set by lenders is primarily based on the applicant’s repayment capacity and the loan tenure.
In the case of gold loan, the loan amount primarily depends on the valuation of gold deposited as collateral and the lender’s loan-to-value (LTV) ratio. The LTV ratio of gold loan can vary widely depending on the lender, repayment option opted for, applicable regulatory cap, etc. The RBI has imposed a regulatory cap of 75% on the gold loan LTV ratio.
Interest rates
Gaurav Aggarwal, Director, Paisabazaar.com, said, “Personal loan interest rate usually ranges from 10%- 24% p.a., depending on the lender and applicant’s credit profile. Gold loan interest rate can widely range between 7.00%- 29% p.a. depending on the risk assessment of the loan applicant by the lender, loan tenure, loan amount, and repayment option opted for.”
Some lenders also tend to charge a higher interest rate for the higher loan amount. While the difference in the interest rate of both these loans may not be much for those with a good credit profile, the interest rate of a gold loan usually tend to be lower than a personal loan for those with a poor credit profile.
Repayment tenure
