Gold Loan Vs Loan Against Property – What Should Your Pick Be?

Estimated read time 4 min read

People usually seek instant loans when faced with a financial emergency. However, the hefty interest rate puts a lot of strain on the wallet. So, while many consider using their gold deposits to get loans, many go for a loan against property. Such loans are called secured loans, as they are backed by security. Many need clarification about which loan is better: a gold loan or a loan against property. 

If you, too, are looking for answers for a gold loan vs loan against property (LAP), continue reading. Not sure which of the two will be more advantageous? Don’t worry. Below we will compare the two secured loans in this post to help you decide which one will be more helpful.

  1. Collateral

Secured loans need collateral that lenders hold until the loan amount has been repaid. You must provide an asset as collateral to lenders to obtain secured loans such as a gold loan or a loan against property. Gold items, such as jewelry and coins, are pledged to get a gold loan. In contrast, you must mortgage your residential or commercial property to qualify for LAP.

  1. Rate of Interest

Unlike loans against property, which have interest rates that are both fixed and fluctuating, gold loans are offered at fixed interest rates. Interest rates on gold loans can go up to 25%, whilst fixed interest rates on loans secured by property typically range from 9.6% to 11.5%.

  1. Eligibility Criteria

Being eligible for a loan is the first step in obtaining one. In the case of gold loans, the applicant’s occupation, and credit score, among other factors, are not particularly important to lenders. The requirements for LAP eligibility are more stringent. Age, income, property worth, business stability, and credit history are a few primary factors that all lenders consider. 

  1. Loan Processing Time

A gold loan is the perfect financial answer when you need money urgently. Why? Because of its liberal eligibility requirements and minimum documentation, which makes it is quick and easy to obtain. In fact, gold loans are practically instant loans.

However, compared to a gold loan, the LAP loan’s processing period is longer. This is because lenders must review all property-related documentation, which takes time. 

  1. Processing Fee

Lenders charge a fee known as a processing fee to process any loan. Processing fees for gold loans are up to 2% of the loan amount, and for LAP, it might range from 1% to 2% of the loan amount, depending on each lender’s policies, terms, and circumstances.

  1. Repayment Tenure

The repayment tenure is the amount of time you have to pay back the lender for the borrowed funds. The repayment tenure for gold loans can be up to 3 years, and for LAP, it goes up to 15 years. Due to the short repayment term of the gold loan, the EMIs would be expensive. So, those looking for small amounts of money are advised to take this loan. 

LAP will be a superior option for a sizable loan amount. Your EMIs would be small due to their lengthy payback term, making it easier for you to repay the borrowed funds. Use a loan against property EMI calculator for better clarity.

  1. Documentation

Minimal documents are needed to apply for a gold loan. In contrast, the list of the required paperwork for LAP is slightly comprehensive. 


Hope the information in this article has cleared your doubts regarding gold loans vs loans against property. You may find a gold loan or a loan secured by the property suitable depending on your needs. Most households have gold as an asset. It is liquid and has a high market value. Gold loans are best suited for smaller amounts because they have short repayment terms. 

LAP is the ideal option if you want to borrow a sizable sum of money because it has a long repayment period and a low-interest rate. Make sure you use a loan against property EMI calculator to compare lenders. 

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