When deciding between a gold loan and a personal loan, consider your situation and needs. Both provide funds, but their features differ:

• Security/Collateral: A gold loan is secured by pledging gold jewellery. A personal loan is unsecured – no collateral, but you need proof of stable income. If you have old gold lying around and need quick cash, a gold loan can be ideal. If you don’t have gold, you’ll need to qualify for a personal loan.
• Interest Rate: Gold loans generally have lower interest rates than personal loans. Since the loan is secured, lenders charge less. (For example, gold loan rates might be ~10–14% p.a., while personal loans often range ~12–20% depending on profile. Indeed, Bajaj Finance notes that the “secured nature of financing makes [gold loan] interest rates more affordable.” On the other hand, personal loans cost more because they’re riskier for the bank.
• Loan Amount: The amount you can borrow on a gold loan depends on your gold’s value (at current market rate). This can be quite high if you own many or high-purity ornaments. A personal loan limit usually depends on your income and credit score. Often, personal loans cap out lower (e.g. ₹5–20 lakhs for salaried individuals), and heavily factor in your ability to repay EMI from salary.
• Eligibility & Speed: Gold loans are quick to get. The bank just needs to verify your gold purity and your documents. There’s minimal paperwork and no lengthy credit checks. Even someone with a poor credit score can get a gold loan (the gold itself guarantees the loan). Personal loans require detailed income proofs, higher CIBIL score, and more time for approval. Disbursement for personal loans can take days, whereas gold loans can sometimes be ready within hours.
• Repayment & Risk: With either loan, you pay EMIs. If you default on a gold loan, the lender has the right to auction your pledged gold to recover dues. With a personal loan, the bank can take legal action but cannot seize personal assets immediately. So in that sense, personal loans carry no immediate risk to your valuables, but gold loans risk only the gold (which you pledged voluntarily).
• Use Case: Gold loans are ideal for short-term, immediate needs where speed and lower interest matter – for instance, paying sudden medical bills, school fees, or funding a seasonal business purchase. Personal loans are better if you need money for longer-term goals (like financing a car, home renovation, or consolidating debt) and you don’t have gold to pledge.

Example: Raj needs ₹2 lakh urgently to send his child abroad for studies. He has ₹3 lakh worth of old gold jewellery. A gold loan might let him borrow ~₹1.5 lakh at ~12% interest, quickly. If he instead tried a personal loan, with his modest income it might take time to get approval and likely at 15–18% interest (or he might not qualify).

Frequently Asked: “Does my credit score affect a gold loan?” In most cases, no – the lender cares about the gold’s purity and value, not your credit history. For a personal loan, a good credit score is usually essential and influences your interest rate.

Summary: If you have idle gold and need quick, affordable funds, a gold loan is generally preferable. If you need a larger sum for many years and have steady income (but no gold), a personal loan may be the route. Kandhavillas Fincorp suggests comparing both: look at the rate, tenure, and purpose. Often, the easiest and cheapest choice (no pun intended!) is a gold loan for immediate, shorter-term needs. Whichever you choose, make sure to borrow responsibly. Kandhavillas Fincorp offers both gold loans and personal loans. Their team can guide you on the best fit: securing a gold loan against your jewellery or arranging an unsecured personal loan, always with clear terms and trustworthy service.