Emergencies are inevitable. Dealing with such circumstances is difficult, especially when financial setbacks compel you to seek a loan from banks and financial institutions. Most people consider taking a Gold Loan, while some consider mortgaging their property. Which is a better option for urgent needs? Let's get to know more in detail.
When you need instant financial help, it can put you under a lot of stress and leave you scouting for immediate funds. At times, liquidating mutual funds or fixed deposits is not a profitable solution, but assets will instantly fetch money. Most commonly, people either take a loan against gold or prefer to their mortgage property to get money. Both practices are equally effective, yet one could be a better option when you urgently need money. In this post, we have pitted Loan Against Property (LAP) against Gold Loans to help you choose the one that suits your requirements.
- Gold Loan and LAP: Purchasing a Gold Loan is quite a common loan offer in the unorganised lending sectors. Now, even the organised lending sectors provide this type of secured loan. As a borrower, you are eligible to get a loan against gold ornaments and coins once the lending expert evaluates the gold. A loan against property or LAP is also a prudent method when you are looking for urgent funds. If you have a property, it can fetch you a loan for your business or personal needs at an attractive interest rate
- Purpose of Loan: You can use the Gold Loan for various purposes, such as funding a child's education, medical emergency, for a holiday, business expansion, etc. In the case of LAP, it can be used for personal needs, industrial property, upgrading clinic or other business expansion
- Rate of Interest: If you are buying an ICICI Bank Gold Loan, you can avail a credit at an attractive interest rate of 11% per annum, based on the prevailing market situation. The rates can vary depending upon the product. LAP rate of interest starts from 8.35% per annum
- Loan Tenure: The minimum tenure of a Gold Loan is three months and the maximum is up to 12 months. If you are mortgaging your property, the maximum tenure is 15 years
- Loan Amount: ICICI Bank offers Gold Loan Amount ranging between Rs 10,000 and Rs 1 crore. On the other hand, you can get loan assistance ranging from Rs 10 lakh to Rs 5 crore in case of a Loan Against Property
- Eligibility Criteria: Whether you are self-employed or salaried, you can apply for a Gold Loan. Lenders do not fuss about occupation, credit score or income. Thus it proved to be a beneficial option for borrowers. The eligibility of LAP is evaluated based on the financial status of the borrower and the value of the property.
Both Gold Loan and LAP are attractive options for you if you are facing a cash crunch. To choose a better one, you can evaluate the interest rates, processing fees and turnaround time, so you gain maximum benefit from the Loan Amount in case of an emergency. While a Gold Loan is quick, highly liquid and has a short repayment period, LAP is best suited when you want a large amount of money and it may require a long processing time. You can choose based on your requirements.
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