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What is Better Between a Gold Loan and a Property Loan?


People are now more welcoming to loans than ever. Loans are no longer seen as the last option for getting cash. Instead, they are seen as a way to manage money. People are happy to take out loans with low-interest rates and pay them back in easy installments because it helps them keep their savings. 

Gold loans and Loans Against Property (LAPs) are two examples of collateral loans. They don’t require selling valuables as a means to cover monthly payments. Both loans have low-interest rates, and you can use them for anything you want. Also, compared to other loans, there aren’t as many rules. The question here is whether a property loan or a gold loan would be better.

Difference Between a Gold Loan and a Property Loan 

When people are in financial trouble, they often get personal loans. These loans are made to help you out of a sudden money jam. The high-interest rate, however, makes it hard on the pocket. And what if you don’t qualify for a personal loan? Or what if the amount of money you need is much more than what you can get with a personal loan? 

In this case, you might consider using the money you’ve saved to get out of your tight financial situation. But it might not always be a good idea to sell assets like mutual funds and fixed deposits.  Here is a quick look at how a gold loan differs from a loan against property.

  1. Collateral

Money lenders will keep the collateral you provide as protection for the loan. It will be called security. You can make monthly payments until you have paid the debt in full. This can be done in the form of EMIs. If you can’t repay the loan for any reason, your lender will use the pledged collateral to get back the amount you still owe.

Since both a loan against property and a gold loan are secured loans, you will need to put up an asset as collateral to get them. 

You must put up gold jewelry or coins as collateral for a gold loan. For LAP, on the other hand, you have to put your commercial or residential property up as collateral.

  1. Criteria for Eligibility

To get a loan, you must first be eligible for one. When someone wants a gold loan, the lender doesn’t care much about their job, credit score, etc. This, in turn, helps all possible borrowers, especially when they need money quickly, because it is more likely that their loan applications will be approved. 

Most gold loan companies will give money to anyone between the ages of 18 and 75. This is so long as the gold jewelry or coins put up as collateral meet their requirements.

On the other hand, the requirements for getting a LAP are stricter than those for getting a gold loan. All lenders examine age, income, property worth, previous liabilities, business stability or continuity, and credit history before approving a loan application.

  1. The Time it Takes to Get a Loan

Loan processing time is the amount of time it takes to get the loan. This is important when someone needs money quickly.

Most of the time, gold loans are easy to process and get approved. Also, you can get the money quickly, which makes it a great way to deal with a financial emergency.

Getting a gold loan is easy, and the loan is processed immediately. After the paperwork is turned in, the loan amount is usually processed in 30 minutes.

On the other hand, a loan against property takes longer to process than a gold loan because the lender needs time to check the property documents.

  1. Repayment Tenure

When deciding which loan to get, the length of time you have to pay it back is very important. The longer the borrower has to pay back the loan, the lower the EMIs are, and vice versa. But a longer term makes the loan more expensive in the long run.

Most gold loans have short payment terms. They can be repaid in as little as a year or between two and three years. However, a loan against property has a 10- to 20-year repayment term.

  1. Paperwork Requirements

Borrowers and lenders can save time and effort by using a gold loan application procedure to streamline the application and approval processes. Lenders only need a few documents before giving out the loan.

Gold loans don’t usually require as much paperwork as property loans secured by real estate, but a lender may still want proof of employment, identification, and domicile.


Whether you should get a gold loan or a loan against your property depends on what you need. 

Gold is a valuable thing that most people own. It moves around a lot and is worth a lot on the market. Since you only have a short time to pay back a gold loan, it would be best to borrow a small amount.

LAP doesn’t have a high interest rate and gives you a long payback time. So, it’s the best option if you need to borrow a lot of money. A gold loan should be your initial choice in a financial emergency. This is because it is easy to get and requires little paperwork.

To learn more about gold loans and property loans, check out Piramal Finance, and the products and services they offer.