When you need immediate cash, both gold loans and personal loans are popular options—but they cater to different needs and risk profiles. Here’s a deep dive into their features, pros, cons, and which one might be best for you in 2025.
🔢 1. Interest Rates & Loan Costs
Gold loan interest rates in India typically range from 8% to 14%, depending on the lender and purity of gold. Public sector banks like Canara Bank and SBI offer rates as low as 8.75–9%, while NBFCs may charge up to 27%.
Personal loans are more expensive, especially unsecured ones, with rates between 10.5% to over 20%, depending on credit score and loan type.
More info:
https://www.livemint.com/money/personal-finance/gold-loans-or-personal-loans-what-borrowers-must-know-before-choosing-11748586594773.html
https://blog.fincover.com/gold-loan/gold-loan-vs-personal-loan-which-one-suits-you/
⏱️ 2. Approval Speed & Documentation
Gold loans require only basic KYC and gold appraisal. Disbursal usually happens within hours or the same day.
Personal loan approval usually takes 2–7 days, unless you’re pre-approved by your bank.
More info:
https://www.paisabazaar.com/gold-loan/which-is-better-gold-loan-or-personal-loan/
https://www.businessparkzone.com/gold-loan-advantages-and-disadvantages/
💰 3. Loan Amount & Tenure
Gold loans allow borrowing up to 75% of the gold’s market value. Personal loans offer higher amounts but depend on income and creditworthiness.
Details:
https://www.paisabazaar.com/gold-loan/which-is-better-gold-loan-or-personal-loan/
⚠️ 4. Collateral & Risk Profile
Gold loans are secured loans where you risk losing your pledged gold on default—but your credit score may remain unaffected.
Personal loans are unsecured—no risk to assets, but missed payments hurt your CIBIL score.
More insights:
https://www.bankbazaar.com/personal-loan/personal-loan-vs-gold-loan.html
🎛️ 5. Repayment Options
Gold loans offer bullet repayment, interest-only, or EMI options. Personal loans mostly follow fixed EMI repayment.
Read more:
https://www.businessparkzone.com/gold-loan-advantages-and-disadvantages/
🏦 6. Eligibility Dependency
Gold loans are ideal for those with low or no credit score. Personal loans require a good credit score and proof of income.
Useful resource:
https://www.livemint.com/money/personal-finance/gold-loans-or-personal-loans-what-borrowers-must-know-before-choosing-11748586594773.html
🔎 7. Fees & Extra Costs
Gold loans have low processing fees but may include appraisal charges. Personal loans usually have higher prepayment charges and penalties.
Check costs:
https://sdcbank.in/is-gold-loan-cheaper-real-costs-and-smarter-choices-in-india
🧾 8. Credit Score Impact
Gold loans affect credit score less severely on default compared to personal loans. However, timely repayment of either loan helps improve credit history.
CIBIL discussion:
https://www.reddit.com/r/CreditCardsIndia/comments/1gk0o27
🏛️ 9. Regulatory Watch on Gold Loans
In 2025, the RBI is tightening norms on gold loan disbursements and processes to protect consumers and enhance transparency.
Official updates:
https://economictimes.indiatimes.com/wealth/borrow/gold-loan-rules-9-proposals-made-by-rbi-in-the-draft-guidelines-and-how-they-may-impact-your-borrowing/articleshow/121230538.cms
https://www.reuters.com/markets/commodities/indias-central-bank-set-ask-lenders-tighten-gold-loan-processes-sources-say-2025-03-06/
https://www.reuters.com/sustainability/boards-policy-regulation/indias-new-gold-loan-rules-reshape-lenders-business-models-says-sp-2025-06-19/
✅ Final Verdict: Which Loan Should You Choose?
Choose a gold loan if:
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You have gold to pledge
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Need fast cash with low interest
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Lack a high credit score
Choose a personal loan if:
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You don’t want to risk gold
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Need higher loan amount
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Have a strong credit history
