Instant Loan Vs Gold Loan: What should I choose?

Instant Cash


31 March 2022

Instant Loan Vs Gold Loan: What should I choose?

Loans aren’t always planned. Sometimes they are under time constraints, like in the case of sudden expenses or medical emergencies. However, procuring a loan isn’t easy. Getting a loan from traditional banks and other financial institutions is time-consuming, especially during lockdown restrictions. If you were to take a loan from money lenders who will charge you higher interest rates, the loan would be a burden rather than a help.

If you are confused about which loan to choose, this article will make it easy for you. Now let’s compare between choosing a gold loan vs. an instant loan, and see which is better.

What is an instant loan?

Banking has become more accessible, faster, and paperless thanks to advancing technology. We are now used to one-click solutions for shopping, communication, booking travels, studying, and more. As a result, we expect quick instant loans to be available when needed too. You might need money for medical emergencies, purchasing significant assets, wedding preparation, travel expenses, and so on. Unplanned events require instant help, and quick instant loans do just that.

These loans are usually instant loans online that don’t require a lot of documents to procure. As the name suggests, instant loans are processed quickly without the need for collateral. The process is highly convenient and minimalistic. These loans are also termed personal or quick loans. You can get an instant loan online without visiting the bank or filling out multiple forms. Instant loan saves time for both the lender and the borrower.

What is a gold loan?

India is one of the largest consumers of gold globally, and the precious metal is not only used for industrial, commercial, or investment purposes. It’s also considered an auspicious purchase, having a lot of religious significance in rituals and weddings. In the time of financial emergencies, gold can also be used to get a loan. Getting a gold loan is a more straightforward process than traditional loans usually. Even if you have a low credit score, you can get approved for a gold loan with less paperwork. But you must take care not to fall into debt traps and borrow only from reputed lenders.

A gold loan uses the gold as collateral against the loan amount. The loan amount granted is based on a certain percentage of the gold’s value. Factors like the gold’s purity also affect the loan amount. Unlike other secured loans like a car or home loans, there aren’t any restrictions applied on the usage of gold loans.

Features of an instant loan

While applying for a quick instant loan, you have to upload all your documents, and the transaction is entirely paperless. If you are a preapproved customer, you will have to submit minimal documents or none at all. An instant loan is an unsecured personal loan; you don’t have to submit any security or collateral to apply for it.

If you urgently need funds, instant loans will promptly disburse the approved funds to your account. The processing time is significantly lesser for these loans compared to traditional loans. You can also customize your loan tenure; they are flexible and can extend to 12 months. If you have a good credit score, you are eligible for loans with lower interest rates. Thus, the instant loan’s overall cost will be easier to repay.

Features of a gold loan

The whole process of procuring a gold loan is similar to other secured loans. First, you are required to present all the documents and gold articles to the lender. After evaluating the gold articles and submitted documents, the lender sanctions a loan amount. The loan agreement will require you to pay off the principal amount with interest to get back your gold.

Gold loan interest rates are lower compared to other secured loans. The interest levied on gold loans varies from lender to lender. A bank will charge lower interest rates compared to NBFCs. The gold loan tenure usually ranges from 3 to 12 months. Depending on your situation, the lender might allow you a more extended period of time or renew it in case of delayed payments. However, the interest rates for gold loans are usually much higher than the rates for quick personal loans available from reputed online lenders like EarlySalary.

Eligibility criteria

The eligibility criteria differ for both the loans

For instant loans

If we take EarlySalary’s eligibility criteria for instant loans as an example, you are eligible for one even without a credit score. Suppose you are a salaried Indian Citizen of 18 or above years of age. In that case, you can easily apply for an instant loan online by signing up on EarlySalary’s app or website through a Google or Facebook account. You must also have a minimum salary of 15,000 rupees per month if you live in a non-metropolitan city and a minimum salary of 18,000 rupees per month if you are a metropolitan city resident.

For gold loans

On the other hand, anyone who has gold can get a gold loan. If you are an Indian resident who is a salaried professional, businessman, housewife, or even a farmer, you are eligible to get a gold loan. So, if you have a low credit score, you still have a chance of getting funds if you have enough gold to pledge for it. However, this process will involve physically handing over your gold to the lender, as well as significantly more paperwork.

Conclusion

If you have no credit score whatsoever and want instant funds without providing collateral assets, you should get an instant loan. However, if you are not a salaried person who fits the eligibility criteria and have some physical gold at hand, getting a gold loan might be the best option for you.
EarlySalary is a user-friendly instant loan medium in India. You are only required to upload your identification like PAN card, address ID proof like Aadhar card, and bank statement to procure a loan. If you fit the eligibility criteria of EarlySalary, you can avail of loans like shopping loans, travel loans, instant cash loans, education loans, and more.

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