When there is a requirement for financial aid, there are various options one can choose from. One such option includes the loan. Loans can be provided from various different financial and banking institutes. Of all the loans that are available the personal loan and the gold loan are favorable options. But between these two options, the loan against gold is the most beneficial one. And here is how.
Faster Loan Processing
For any loan application, there is a process wherein documents are verified and your financial background is checked. Once this verification process is done, based on these facts, you will be given the ideal financial aid. This loan processing can take anywhere between weeks to months to get verified. With the personal, this process takes weeks. This is due to the fact that there are several documents that have to be submitted and verified. In addition to this, most banks also conduct a background check to ensure that there is no risk when investing in you. With the loan against gold, the processing time is extremely short. Only the value of the gold is verified along with the submission of certain basic documents. The verification process for the gold loan can take anywhere between a few days to a weeks time, making it beneficial over the personal loan.
Lower Interest Rates With A Secured Loan
The major difference between the personal loan and the gold loan is security. With the personal loan, there is no security provided thus making it a risky option of investment to the banking institute. In order to incorporate this risk factor and compensate for the possibility of loss of funds if the borrower defaults on the loan, a high interest rate is normally provided for such a loan. However, with the loan against gold, the interest rate is normally low. As the gold items are provided as a form of security, the risk of investment is lower. If the borrower is unable to repay the borrowed amount with interest, the items of security are put up for auction to repay the borrowed amount. Thus, the interest rate that is provided is low.
Minimal Eligibility Criteria
A personal loan has several eligibility criterions. They include income value, employment; company of employment, credit score and many more factors. In order to be applicable for such a loan, they need to satisfy all the criteria. For certain individuals, they are unable to satisfy these criteria.This can hamper their chances of getting the loan they desire. Additionally, if they satisfy the eligibility criteria, they may not get the loan amount they desire. However, when applying for the loan against gold, there are minimum criteria required. They only have to submit certain documents while providing a minimum income.