Gold Loan vs Personal Loan: Which to Choose?


  • Which loan option should you choose between Gold Loan and Personal Loan?
  • Decide based on interest rates, maximum loan eligibility and other factors as highlighted in this post

Gold Loan Vs Personal Loan - Which One Should You Choose?

Financial needs can emerge at any point in an individual’s life. It can be in the form of some medical emergency or funds for your child’s education/ marriage or for travel. To overcome such situations, people look to opt for several kinds of loan facilities provided by banks and financial institutions. Among all the loan options available in the market, the two most popular ones to get money for your immediate personal needs are Gold Loan and Personal Loan.

But people often find themselves in a dilemma when they have to choose between Gold Loan vs Personal Loan. Both these loan options have their advantages and disadvantages and before choosing from them, it is important for an applicant to know which kind of loan option will suit him or her more. To help you choose a better alternative, we will compare these two loans on various factors. So, just read the comparison here and choose the one that meets your needs better.

What is a Gold Loan and a Personal Loan?

Before coming on to the factors, it is important to know briefly about what is a gold loan and a personal loan. Both loans provide quick access to funds. With the help of gold loans, you can get required funds against your gold ornaments and bank-minted gold coins, whereas, with the help of a personal loan, you can get the funds without submitting any collateral to the lender. The loan amount in both the loan options will be given to you for a fixed tenure within which you have to repay the loan. So, you can see that the basic difference between these two loans is their very nature. One is secured in nature whereas the other is unsecured and free from any collateral.

Things to Keep in Mind while Choosing Between Gold Loan and Personal Loan

Now you have some basic idea about both of the loan options, it’s time to look at the factors that you must keep in mind while choosing between a gold loan and a personal loan. These factors will surely help you in making the right decision according to your own convenience and requirement.

We are mentioning all of them below. Do check them out!

Interest Rate on the Loan Facility

This is the most crucial factor that individuals look at while choosing a suitable loan for them. Interest rates charged by the lenders directly affect your repayment amount. The higher the interest rates will be, the higher will be your EMI amount. That’s why it is always advised to opt for a loan facility with lower interest rates. As for the Gold Loan, you pledge your ornaments as the security to get the required loan amount, the interest rates are lower compared to the one charged on personal loans where you don’t need to provide any kind of security.

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Lenders have to bear less credit risk in a Gold Loan, that’s why the interest rates on this usually range from 10% to 16% per annum which is pretty affordable. You can get much lower interest rates if you have an existing good relationship with your lender.

While in the case of personal loans, the interest rates are a bit higher than what is the case with gold loans. Personal loan interest rates generally range from 10.50% to 18% per annum. In some cases, it can go upto a maximum of 25% per annum. Also, personal loan interest rates generally tend to change from one lender to another depending on several factors such as applicant’s age, monthly income, employment type, job history, and credit score.

We are providing interest rates of both Gold Loan and Personal Loans offered by the top lenders in the table below. Have a look!

Personal Loan Interest Rates of Top Lenders

LendersInterest Rates (In Per Annum)
State Bank of India (SBI)11.00% - 14.00%
ICICI Bank10.75% - 19.00%
HDFC Bank10.75% - 14.50%
Bajaj Finserv11.00% Onwards
Bank of Baroda10.90% - 18.25%
Axis Bank10.49% - 21.00%
Punjab National Bank (PNB)11.40% - 16.95%
Kotak Mahindra Bank10.99% Onwards
RBL Bank14.00% - 23.00%
Punjab & Sind Bank11.15% - 12.75%
Canara Bank11.75% - 16.25%

Gold Loan Interest Rates of Top Lenders

List of Banks/LendersGold Loan Interest Rates (In Per Annum)
State Bank of India (SBI)7.50%
ICICI Bank10.00% - 19.76%
HDFC Bank9.50% - 17.55%
Muthoot Finance12.00% - 27.00%
Manappuram Finance12.00% - 29.00%
Union Bank of India7.00% - 9.60%
Axis Bank13.00%
Kotak Mahindra Bank10.50% - 17.00%
Federal Bank8.50% Onwards
YES BANK9.00% - 15.00%
Canara Bank7.65%

Loan Amount

While availing for any kind of loan facility, the loan amount is one of the most important factors that you need to look at. When we talk about the personal loan, the loan amount can go upto a maximum limit of INR 40 lakh to INR 50 lakh. But the personal loan amount will always depend on the monthly income and repayment capacity of the applicant, so it is important to keep this fact in mind while applying for a personal loan. The loan amount varies from one lender to another.

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In the case of Gold Loan, the loan amount depends on the overall value of the precious yellow metal you will submit to the lender. Lenders generally provide upto a maximum of 90% of the overall gold value as the loan amount. Even as the loan is based on the value of gold, lenders can put a cap on the maximum quantum. For example, the overall value of your gold is INR 10 lakh. In that case, you can get a maximum of INR 9 lakh, subject to the overall cap placed by the lender. So, after knowing this, you can easily choose between gold loan and personal loan according to the loan amount you require.

Loan Tenure

Loan tenure is the number of months or years given by the lender within which you need to repay the loan amount. The loan tenure can be chosen by you according to your convenience. In a personal loan, you can choose tenure from a minimum of 12 months to a maximum of 5 years while the tenure for your gold loan can be a maximum of 2 years.

You must choose the tenure according to your repayment capacity otherwise you may default in the repayment. You may have to pay more interest if you choose to pay for a longer tenure. So, choose wisely.

Loan Repayment Method

Repayment is an important part of any loan facility you opt for. When you decide to take a loan amount from any lender via a gold loan or a personal loan, you have to repay it within a fixed tenure. When we talk about the personal loan repayment method, you can repay via the Equated Monthly Installments (EMI) method. You need to pay a fixed monthly installment through this method. The EMI amount will include a part of both your principal and interest amount. You can also have an estimation of your EMI amount with the help of the Personal Loan EMI Calculator.

When we talk about the Gold Loan repayment method, there is more than one way by which you can repay. You can choose the most suitable method among the four gold loan repayment methods. All of them are mentioned below.

Regular EMI Payment – Pay a part of your principal and Interest amount in the form of Equated Monthly Installments within the tenure. Calculate the EMI amount with the help of Gold Loan EMI Calculator

Bullet Repayment – Repay the total principal and accrued interest amount at the end of tenure only through this method.

Upfront Interest Payment – Pay the total interest payment at the start of your tenure and principal amount at the end of tenure

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Interest Payment at Regular Intervals – You can choose the option to pay the Interest amount at regular intervals – Monthly/ Quarterly/ Semi-yearly/ Yearly and pay the total principal amount at the end of tenure

Eligibility Criteria

Gold Loan can be a more suitable loan option for you if you want to get a loan with lenient eligibility criteria. Suppose you have been struggling to get a personal loan because of your bad repayment track and need funds urgently, you can opt for a gold loan by submitting gold ornaments to the lender.

As lenders have gold ornaments as security, they don’t ask for anything else to be eligible for a gold loan. You just need to have gold. In case of any default from your side, the lender can liquidate your assets to recover the loan amount if you fail to repay. However, in the case of a personal loan, which is an unsecured loan, lenders check all your details carefully before giving you the loan amount. An applicant needs to fulfill the eligibility criteria fixed by the lender to get a personal loan. Above all, the applicant must have a credit score of 700 or above to get a personal loan while in case of gold loans, lenders don’t check your credit score. So, if you have a bad credit score, you can opt for a gold loan and improve your score by repaying the loan amount on time.


This is one of the factors that any individual must keep in mind before choosing between a personal loan and a gold loan. Everybody wants money in their bank account as quickly as possible in today’s time. In the case of a personal loan, you will need to submit the application form with KYC Documents after which the bank will check your details and disburse the loan amount into your bank account if all goes right. You can apply online as well as offline.

While, in case of a gold loan, you will need to submit gold with your basic documents, after which the bank will evaluate your gold to decide the loan amount. After it is done, the bank will disburse the loan amount into your account. For this, you will have to visit the branch; you cannot do it online. Both loans are quite convenient and easily accessible.

So, we hope that after reading the comparison, you must be in a better position when it comes to deciding between a gold loan and a personal loan. Choose wisely!

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Personal Loan Interest Rates December 2023
HDFC Bank10.75% - 14.50%
ICICI Bank10.75% - 19.00%
IndusInd Bank10.25% - 26.00%
Kotak Bank10.99%
RBL14.00% - 23.00%
SMFG India Credit12.00% - 24.00%
Standard Chartered Bank11.49%
Tata Capital10.50% - 24.00%
Home Loan Interest Rates December 2023
Axis Bank8.75% - 9.15%
Bank of Baroda8.50% - 10.60%
Citibank8.75% - 9.15%
HDFC8.50% - 9.40%
ICICI Bank9.00% - 9.85%
Indiabulls Housing Finance Limited8.65%
Kotak Bank8.70%
LIC Housing8.50% - 10.50%
Piramal Capital & Housing Finance10.50%
PNB Housing Finance8.50% - 10.95%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI9.10% - 9.65%
Tata Capital8.95% - 12.00%