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Why Is A Gold Loan Better Than A Credit Card Loan?

  • There are situations in life when we may need some financial assistance. It could be a sudden medical expense or an unexpected cash crisis or paying an education fee. In such situations borrowing money from dear and near ones may not always be an option for all. Muthoot FinCorp can help you sail through such situations with ease. But at such times, one might be confused about which type of loan to take. That’s why we bring you here to mark the comparison between the two popular kinds of lending- Gold Loans and Credit Card Loans.

    Why is a Gold Loan Better Than a Credit Card Loan?

    With skyrocketing gold prices, if you have invested in gold, you can easily pledge that and avail of a reasonable loan amount to tide over a temporary cash crunch. The past few decades have seen only a steep rise in gold prices and never otherwise. Hence you can avail of gold loans from Muthoot Fincorp and even use our top-up facility to further cater to your emergency cash needs. Unsecured loans like personal loans and credit cards entail colossal interest rates that can further stress your finances, especially when cash is strapped. Let’s compare each feature of credit card loans and gold loans to know in detail which is the best for you.

    Collateral

    Gold loans are secured loans, and hence they offer lower interest rates than loans that do not involve any collateral. Credit card loans are unsecured and come at high loan interest rates up to 24% per annum, while gold loans start at 6.9% per annum. Additionally, the processing fees for gold loan is also very low, as Rs 12 to 0.25% of the loan amount is availed at Muthoot Fincorp.

    Credit History

    Credit history is essential for credit card loans, while it isn’t critical for gold loans as they are secured loans. So, if your credit history is lower, you can still take a gold loan and repay it on time to increase your credit scores. Additionally, unlike credit cards and personal loans, gold loans do not check credit scores to offer you the best deals in the market. You can still get lower interest rates and higher funds with your security pledged.

    Quicker Loan Approval and Fund Disbursal

    Credit cards are quicker, but gold loans are even faster regarding approval and disbursal. Availing of gold loan is good and hassle-free as well. You can walk into the nearest Muthoot branch and avail of the loan within a few minutes.

    Loan Amount

    With credit cards, you cannot exceed your credit limit. Additionally, exhausting your credit card limit will take a hit on your credit score. Meanwhile, you can avail up to 75% of the gold value pledged as a loan amount instantly with gold loans. You can even take a top-up loan on your existing gold loan if you haven’t utilized the full value of the gold asset pledged. You can easily calculate the maximum amount of gold loan you can get according to the weight of the gold loan and the interest rate of the gold loan in the comfort of your home using a gold loan calculator.

    With this free self-help tool, you need to input the required loan amount and residential state. Once you submit the details, the page will display the interest rate and tenure accordingly. You can choose a combination that you can repay quickly and plan your loan before availing it. We have more than 3600 branches across India for your convenience. You can select the scheme of your choice by going to the nearest Muthoot branch near you.

    Also, Read- How Gold Loan Is Considered A Smarter Choice To Complete Your Education?

    Flexible Repayment

    Unlike credit card repayment, gold loan repayment is flexible. The borrower can choose from several options for repayment, which are not offered in any other type of loan. Let’s know what they are:

    • Repayment through flexible installments.
    • Repayment of only interest rate during the loan tenure and payment of the rest of the amount at the end of the tenure
    • Repaying the total loan amount and interest rate together at the end of the tenure.

    Gold Loan Vs Credit Card Loans in a Nutshell:

    Feature

    Credit Card

    Gold Loans

    Collateral

    No collateral is required.

    Requires gold as collateral.

    Interest Rates

    Credit card interest rates are higher as it is an unsecured type of loan and starts at an interest rate of 24% for a year.

    Gold loans being secured loans, come with the lowest interest rates starting at 6.9% per annum.

    Loan amount

    You can avail of a maximum loan amount up to the credit limit permissible.

    You can get a loan amount of up to 75% of the pledged gold.

     Credit History

    It plays a crucial role in getting better deals.

    Not essential to obtain better deals

     Loan Approval

    Quicker

    Quicker than Other Loans.

    Tenure

    Loans are generally offered for a year.

    Gold loans are provided for a maximum period of 6 months.

    Documentation

    You need a good credit score, a stable job, a higher income, and a good repayment capacity.

    Apart from submitting collateral, you only need to fill out a basic KYC for the application.

     

    Read Also: Gold loan vs Personal loan

    Additionally, with gold loans, your gold stays secure at the deposit vaults for safekeeping. Hence, you can also save money on locker rent with gold loans.

    While both loans have similarities and differences, Muthoot Fincorp offers the lowest interest rates on gold loans, which are easy to avail of. If you would like to avail of a gold loan, you can give us a call at 1800 102 1616. We are happy to answer your queries.

    Harshit Agrawal 29-Dec-2021 2456 Views

About Author

Harshit Agrawal -
Harshit Agrawal heads digital marketing for Muthoot Pappachan Group from its head quarter based in Kochi, India. He has managed digital marketing & activations for brands such as Maruti Suzuki, Hero MotoCorp, Bharti Airtel, Google, Mankind Pharma...read more

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