Gold loan vs personal loan: Which one should you choose?

2 min read

A gold loan and a personal loan are two convenient financing options when you need money at short notice. Read about gold loan vs personal loan in detail before you make a decision.

What is a gold loan?

A gold loan is a type of secured loan where borrowers pledge their gold jewellery or ornaments as collateral to obtain funds from a lender. The loan amount is determined based on the gold's value, and borrowers receive the loan after agreeing to repayment terms. If the borrower defaults, the lender can sell the gold to recover the outstanding amount.

Gold loan pros and cons

  • Since this is a secured loan, lenders usually offer up to 75% of the value of the gold you offer as collateral.
  • The loan approval and disbursal process are swift and easy.
  • Your credit history or score is not critical since it is a secured loan.
  • You have flexible repayment options.
  • If you fail to repay the loan, the lender can liquidate your asset to recover the money.

What is a personal loan?

A personal loan is an unsecured loan where individuals borrow a fixed amount from a financial institution or lender for various purposes, such as higher education, medical expenses, or wedding. Approval is based on the borrower's creditworthiness, and repayment is typically done through fixed monthly instalments with interest over a specified period.

Personal loan pros and cons

  • This is an unsecured loan, so you do not have to pledge any collateral to apply for a personal loan
  • Just fulfil simple personal loan eligibility criteria to get funds. Make sure you have a good credit score of 685 or higher to get the loan with ease
  • Submit minimal documentation, and once the verification is done, the amount is disbursed to your account within 24 hours* of approval
  • You can select your repayment duration ranging up to 96 months based on affordability
  • With a Flexi personal loan, you can borrow when you want from a sanctioned loan amount and prepay when you can. This also helps you lower your EMIs by up to 45%* when you choose to pay only the interest as monthly instalments

Gold loan vs Personal loan - Which is better loan option?

When it comes to financial needs, choosing the right loan option is crucial. Gold loans and personal loans are popular choices, each with its unique benefits. Here's a quick comparison to help you decide:


Gold Loan

Personal Loan


Secured with gold assets.

Unsecured, no collateral required.

Interest Rate

Lower interest rates due to collateral.

Higher interest rates due to unsecured nature.

Approval Time

Quick approval process.

Approval might take longer due to verification.

Loan Amount

Higher loan amount based on gold value.

Loan amount depends on creditworthiness.

Credit Score

Not a significant factor in approval.

A higher credit score is often required for approval.

Risk Factor

Risk of losing gold assets if not repaid.

No risk to assets, but affects credit score if default.

*Conditions apply

Which loan you should choose between a gold loan and a personal loan?

Choosing between a gold loan and a personal loan depends on individual needs. A gold loan is secured by gold collateral, offering lower interest rates but risking asset loss. Personal loans, unsecured, have higher rates but no collateral risk. Evaluate your financial situation, urgency, and risk tolerance before deciding.

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