Loans of any kind are often regarded as a setback to your finances as you need to pay them back after a certain point of time and that too with an additional Interest. However, the importance of loans cannot be discarded either. It serves as a backbone when you need financial assistance for many of your activities; be it your kid’s education, your home rent, or electricity bills, there are some things you just can’t shake off. Taking loans as such becomes inevitable when it comes to getting out of a financial problem.
So now that this need is defined, you may be thinking of the options you have. Though there are many kinds of loans available in the market, the best of the lot are personal loans and gold loans. Further, gold loans score higher over personal loans if you consider a few aspects. Some of these are:
1. It is easier to get approval:
If you want to take a gold loan you need to take your gold to the bank. They will evaluate the gold quantity and, based on its valuation, pay you the possible loan amount after some basic paperwork. The process is simple and is completed in a matter of a few hours. With personal loans, however, it can be a little difficult. You need to submit various documents to the bank and complete some formalities of paperwork. Based on your future earning capacity and your past credit history, the bank will consider giving you the loan. The process also takes a lot of time before it is finally over.
2. Interest rates are attractive and affordable:
It is generally seen that the interest rate charged on the gold loans are lower when compared to the personal loans. Since personal loans are of different types, the interest rates charged on them are also different. Sometimes they vary according to the time it is supposed to be repaid. Thus opting for a gold loan would be a safe option.
3. Partial Payment facility available:
Apart from the fact that getting a gold loan involves a hassle free process, it also has the advantage of partial payment facility. It provides the flexibility where you can repay a certain amount of money whenever it is possible. However, you can get back the gold only when you have repaid the full amount. With personal loans, such partial payment options are not available. You need to pay with equal monthly installments or the complete sum – whichever you like.
4. Rise in gold prices makes it a valuable asset:
Recently, due to the subsequent rise in gold prices, it is considered as a better investment with less market risks. The amount you spend on buying a certain quantity of gold will be valued much more sometime later. So you are on the profitable end as you get more amount of loan sanctioned than it actually cost you. With personal loans such things cannot be expected.
5. Emotional attachment makes you serious with repayments:
Gold is something which most people are emotionally attached to and they tend to want to get it back soon too. They try all possible means to have a good money management policy so that they can pay off their debts earlier and get back their prized possession. This feeling thus helps you stay away from defaults and makes gold loans a better choice.
However, if you default with the payments, it can turn out to be difficult. You will also be missing wearing them during family occasions. So make sure you pay the dues in time and get back your gold valuables to where they belong!
Author bio: Jonny Pean is a financial consultant and writer for Easyfinance.com. He advises people on making the right personal finance decisions and helps them get rid of their loans and debt problems easily.