Navigating through the numerous rules and processes to avail of a loan can be frustrating. Especially when faced with a financial emergency. By opting for a loan that offers a faster approval and disbursal process, you can get the much-needed assistance in a timely manner.
Fortunately, now there are financing options available to help you raise the required funds quickly. Instant personal loans and gold loans are the ideal options for individuals facing financial constraints and requiring immediate financial support. Banks and NBFCs provide these loans with varying interest rates, enabling you to overcome any financial emergency.
Understanding instant loans
Instant loans, also known as personal loans, are unsecured loans that provide quick access to funds. They are typically processed quickly, allowing you to receive the loan amount within a short time frame. Instant loans do not require collateral and are primarily based on your credit score, income, and repayment history. These loans can be utilised for various purposes, such as medical expenses, home repairs, or travelling.
Understanding gold loans
Gold loans, on the other hand, are secured loans that involve using your gold jewellery as collateral. The loan amount is determined by assessing the value of the gold that you provide. Gold loans are considered a safer lending option for financial institutions, as they have tangible security to fall back on in case of default. These loans often have lower interest rates compared to unsecured loans and offer multiple repayment options.
Here are a few differences between instant loans and gold loans, to help you make an informed decision on which option suits your needs better.
Collateral
While instant loans often rely heavily on factors like your CIBIL Score, credit history, and income, gold loans have a distinct advantage. With a gold loan, the main requirement is to pledge your valuable gold as collateral. This provides the lender with a sense of security, increasing the likelihood of loan approval.
Loan amount
Instant loans usually offer a smaller loan amount compared to gold loans. Since gold loans are backed by collateral, lenders are more willing to provide higher loan amounts based on the value of the gold being pledged. If you require a larger sum of money, a gold loan might be more suitable for your needs.
Interest rates and repayment terms
One of the significant advantages of gold loans is the lower interest rates they typically offer. As gold loans are secured by collateral, lenders can provide more favourable interest rates compared to unsecured instant loans. Additionally, gold loans often come with flexible repayment terms, allowing you to choose a tenure that suits your financial capabilities. This flexibility ensures comfortable repayment and may help you save on interest costs in the long run.
Credit score consideration
Unlike instant loans that heavily rely on a good credit score for approval, gold loans offer a lifeline to individuals with low credit score or no credit history. Since gold loans primarily focus on the value of the collateral, they provide a viable borrowing option for those facing credit challenges. Even if you have a poor credit history, you can still secure a gold loan and use it as an opportunity to improve your creditworthiness by repaying the loan on time. This makes gold loans a valuable tool for rebuilding your credit and regaining financial stability.
