When it comes to financial emergencies, most people consider using their assets, like property or gold, as collateral for a loan. Although both options are excellent for obtaining funds urgently, the type of lending option you should choose depends on your financial situation and requirements. In this blog, we will compare the two types of loans in detail and determine which one is the better option.
What is a Loan Against Property?
A loan against property is a secured loan that you get by pledging your property as collateral for the loan. The property can be residential, commercial, or even land. The lender keeps the property secure and lends money according to its market value. This type of loan can be beneficial when you need a larger loan amount for business growth, education, wedding expenses, or medical needs.
Read Also: What is Property Mortgage Loan? Meaning, Definition, and How it Works?
What is a Loan Against Gold?
A loan against gold is another type of secured loan, wherein you pledge your gold ornaments, coins, or bars as security for the loan. The lender checks the weight and purity of the gold and provides funds based on these factors. A loan against gold is ideal for individuals who require immediate funds without the need for lengthy documentation or approval processes.
Read Also: What is Gold Loan or Loan Against Gold?
Key Differences Between Loan Against Property and Loan Against Gold
Both types of loans can provide you with access to funds when you need them most. However, both function differently across several factors. Let's understand the key differences:
|
Advantages of a Loan Against Property
If you’re considering this option, here are the benefits you should know about:
- High Loan Amount: As property prices are constantly rising, you can get a higher loan amount.
- Low Interest Rate: The lender offers low interest rates due to the high value of the collateral. The interest rate for a Loan Against Property at Poonawalla Fincorp starts at 9.5% per annum, with a loan amount of up to ₹25 Crore.
- Longer Loan Tenure: You can repay the loan over a longer period. Hence, EMIs are convenient. The loan tenure at Poonawalla Fincorp ranges from 3 to 15 years.
- Usage for Multiple Activities: You can use the loan amount for business or personal purposes.
Advantages of a Loan Against Gold
If you’re considering this option, here are the benefits you should know about:
- Quick Processing: The loan is disbursed much quicker than any other type of loan.
- Fewer Documents: You don't need any lengthy paperwork or documentation. All you need is your gold and KYC details.
- Short-Term Flexibility: This loan is perfect for fulfilling short-term financial requirements, such as urgent working capital needs at the business.
- Safe Custody of Gold: Your gold remains securely stored in the lender’s vault until you repay the loan.
Which Option Should You Opt For?
Choosing between a Loan Against Property and a Loan Against Gold largely depends on the individual’s situation. Here are a few tips to help you make your decision easier:
- If you require a high amount of money for business growth, overseas studies, or important life occasions, then a Loan Against Property is ideal. The higher loan value and more extended repayment period make it suitable for long-term financial requirements.
- If you need quick access to funds for urgent expenses like medical, urgent travel, or short-term needs, a loan against gold is the best option. It is much easier to obtain, requires less documentation, and has a shorter repayment period.
If you’re worried about risking a valuable asset, consider the implications carefully. Property is usually a lifetime asset, while gold, often carrying emotional and sentimental value, is relatively more liquid and easier to sell.
To Conclude
A Loan Against Property and a loan against gold are both great financing options in case of emergencies. However, your decision will be based on the amount of money you need, how urgently you need it, and how much time you can repay the funds. Always compare interest rates, repayment terms, and risks before deciding.
Poonawalla Fincorp offers both Loan Against Property and Loan Against Gold, at affordable interest rates and flexible repayment tenures. You can easily apply for high loan amounts online. Connect with us today for more details!
FAQs
Can I continue living in my house if I take a loan against property?
Yes, you can continue living in your house while it is pledged as collateral, as ownership still belongs to you.
What happens if I cannot repay my loan against gold on time?
The lender may auction your gold after giving notice; however, you can avoid this by repaying the loan on time or opting for renewal.
Is the loan amount fixed for all properties in a loan against property?
No, it depends on the market value, location, and condition of your property.
Can I get a top-up loan on an existing loan against property?
Yes, many lenders allow a top-up if you have a good repayment track record.
Do I need proof of income for a loan against gold?
No, unlike property loans, income proof is usually not required for gold loans. Most lenders only ask for KYC documents.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply