Gold Loans: Worth?

While in this era, the loan is the very first thing which comes to everyone’s mind when they require a big amount of money, it also comes with its own pros and cons. First of all, let us understand what are different kinds of credits and what are different types of loans.

Types of Credit Secured Unsecured
Revolving Secured Credit Card Unsecured Credit Card
Installment based 1. Gold Loan

2. Home Loan

3. Auto Loan

4. Loan Against Property

1. Personal Loan

2. Business Loan


Now, depending on your requirements, there are different loans. The loan’s total amount and the interest to be paid on the loan depends on the salary you get if you are a salaried person or on the net profit u earn if you are self employed or a businessman along with your credit score.

Credit score plays a very important role in the speed of getting a personal loan and getting the lowest possible interest.


Ronit and Mayur were childhood friends. They both grew up together from kindergarten till their post graduation together. They always had similar interests in whatever they did. So, the studies also were always the same. But, their personalities were totally different. Ronit was calm and highly responsible in everything. And Mayur was a total opposite of that; always on toes, and irresponsible.  Ronit was Calculative and Responsible in spending money and also handling all his financial attributes. And Mayur on the other end was never calculative and super irresponsible in handling his finances. The result of which was : Ronit had a cibil score of 803 whereas Mayur had the score of 637. Now there came a time when they both were planning to take a loan. Ronit got loan easily with a very low amount of interest wherein Mayur had to go through tough time! He actually had to apply for a personal loan for low cibil score.


At any event in life, we do not consider the importance of few things, but in a long run, it definitely makes us pay a lot later. Like in the above case, everything was set. Good qualification, great job, nice family, but the ignorance towards handling a financial constraint had a huge loss for Mayur.

Ronit managed to get a personal loan at 11% interest rate. And Mayur however, got the quote with 18%  interest rate. Now by just looking at it, we feel that its just the difference of 7%, but when the amount is high, that 7% will actually be an installment for that month.

When these both friends were discussing this, Mayur came up with a thought of the Gold Loan. He had heard about this from one of his family members. Hence, they went and checked with few of the banks on the gold loan. Mayur as belonged from a well to do family, had decent amount of gold ornaments and even the gold biscuits. Now while they went for this loan, they got the deal for 13.5%.Obviously, it was better deal.


Now, what exactly happens while you plan for personal loan or a gold loan? The Personal loan comes under unsecured kind of credit, so; the risk is involved is definitely high. Hence the interest rate is also more. While in case of gold loan, it is a secured type of a credit, so; the risk involved is practically zero as the bank or a financial company for that matter has the exact amount of asset as much they have given it to you.


Let us look at few of the attributes of Gold Loan.


  • Minimum loan amount :      as low as 20000
  • Maximum loan amount : Upto 25Lakhs (Depending on various banks)
  • Disbursal Time      :      Hardly 24 Hours
  • Loan tenure      :      1year – 5 Years
  • Processing fees      :                 5% – 2.5% of total value
  • Pre-closure charges :                   No
  • Age      :      18years to 60 years
  • Documentation      :


Gold loans are the alternative of the personal loan, specially if you are planning for Personal Loan for Low CIBIL Score. As mentioned earlier, all the loans have their own pros and cons. You have to make a wise choice if the loan is perfect fit for you and it falls in which category and also if you have more pros! When there is urgent requirement of funds, and you are in a phase of increasing your credit score or you are a no history customer, Gold loans are definitely worth!