There are a lot of loans available in the market tailored to your needs and wants. The loans are categorized into two, secured and unsecured loans. When a loan is sanctioned without collateral, it is called an unsecured loan. Personal loans, some type of education loans and credit cards are categorized in unsecured category.
On the other hand, if you are applying for a loan, guaranteed by collateral it will be a secured loan. Loans such as home loan, LAP, car loan, gold loan, LIC policy, etc are categorized into secured loans.
When you encounter a financial crunch and are in need of urgent funds, you can definitely apply for a loan. Taking a loan completely depends on your requirement and your repayment capacity. Personal loans are always at your disposal. The processing is so fast, Sometimes you get you loan sanctioned within minutes. But there are many of us who do not like personal loans because of high interest rates and less tenure of repayment. Sometimes even a personal loan cannot help at urgent situations because of its limitations, so what would you do in such situation?
Opting for a gold loan or a LAP can be a helpful remedy in such situations. But which one is better?
Let’s do a short comparison between these two loans and understand which one suits you better when faced with an urgent financial requirement,
Loan against gold is an easy one. It can be opted at lightning speed and there are not much paper work demanded in the processing. Every Indian family has some chunk of gold with them, irrespective of their financial condition. A gold loan is taken as the most proffered type of loan against Indians as it offers low gold loan interest rate.
You just have to produce your gold ornaments or biscuits to the bank, the bank will then weigh the gold and determine the amount of loan it can sanction. The amount completely depends on the ornaments weight.
The following are the features of gold loan,
- Gold loans have flexible tenure which ranges from days to months. There are Non-banking financial companies which allow longer tenure as well.
- EMIs are flexible and depends on the gold market’s upward and downward revision of prices
- The loan disbursements are quick as compared to other loans.
- The gold is took as collateral until you do not make the payment.
Loan against property
This is an entirely different concept than the gold loans. You can opt for a LAP by keeping your residential or commercial property as collateral to the lender. There are a lot of factors which determine your loan sanction. The bank also conducts a credit score check on you and if you have a low cibil score, no matter how expensive the property is, your loan will be denied.
This loan can only be availed if you have a property n hand.
Here are some key features of loan against property,
- You can opt for tenure between 10 to 15 years for loan repayment.
- The loan amount is determined between 40%-60% of the total value of property.
- A thorough background check is done on the applicant or applicants if any like cibil check, monthly income, etc.
- The property’s original documents will be submitted to the bank until the loan is not paid in full.
- This loan is suitable for higher loan amounts as individuals can opt for long repayment tenure.
- If the loan is not paid on time, the lender has the power to auction the property and recover its loan money.
Both have its advantages and disadvantages. If you want quick money and can make the repayment within days, go for a gold loan and if your requirement is high and cannot make the payment in short notice, go for a LAP. Understand your need and take the loan you plan for. Before taking these loans, do a thorough research on the options with different lenders and get the best on your situation.
Taking a loan is easy, if you make all your payments on time you will be in financial heaven but if you default your payments, not only it will affect your cibil score but also will hamper your financial and personal life.