Gold loans can offer lower interest than personal loans Gold loans are secured by the gold you pawn, therefore lenders view them as riskless. That's why interest charges tend to be lower than personal loans, which aren't secured. As of August 2025, leading banks and NBFCs have gold loan rates starting with 8.5% to 11.5%, while personal loan rates start from around 10.5% and go up to 24% depending upon your credit score. If your credit history is poor, gold loans can come to your rescue.
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Gold loans are processed and sanctioned quicker Since gold loans are collateral loans, your income and repayment history are not as vital to the lenders. If you carry your gold jewellery and ID/address proof with you to the bank or NBFC branch, your loan can be sanctioned in one hour. So, gold loans are very useful at times of emergency when time is not in your favour. Personal loans are more time-consuming since they entail in-depth checks and approvals, especially if you are self-employed or earning low income.
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Loan amount depends on gold value, not income Gold loan eligibility is mostly on the basis of market value and gold purity you mortgaged, not your earnings. Today, lenders can offer up to 75% of the value of the gold, depending on purity. Personal loan eligibility is determined by your business income or month's salary. So if you need more and don't get it based on income, your gold can help you get more money.
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Shorter tenure and bullet repayment facilities are available Gold loans have very short repayment tenures of 6 to 12 months, but some will stretch to 24 months. You can also have flexible repayment modes, e.g., bullet repayment (paying interest monthly and the principal at maturity). Personal loans have fixed EMIs ranging from 12 to 60 months. If you know that you will repay soon, the flexibility of a gold loan can be a major advantage.
You lose your gold if you default While there are benefits to gold loans, do not overlook the danger: if you fail to pay within time, your lender will auction the gold. Personal loans do not immediately carry this asset risk, but your credit score will take a hit. If the gold to be mortgaged carries emotional or family significance, take this risk gravely. You may request notice period or reschedule the loan if you feel that repayment will most likely be deferred.
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Gold loans are ideal for short-term needs If you have a short-term financial requirement—like school charges, hospital bills, or working capital for a small business—a gold loan may be the ideal choice due to quick disbursal, better interest rates, and easy terms. For larger or long-term goals like home renovation or managing debt, a personal loan might be more apt to you if you are able to negotiate a good deal.
