Home top up loan vs. personal loan vs. gold loan

Opting for a loan is the best option when you are in urgent need of funds. Nowadays, you can opt for different types of loans depending on why you need the amount. But if you are looking for loans with no restriction on their use, gold loans and personal loans are extremely popular. In this article, we will compare a gold loan vs personal loan and help you pick the one that’s the best for you.

Interest Rate

When you are applying for a loan, the interest rate is a key consideration. If you compare the gold loan vs personal loan interest rates, you will realize that both of them offer attractive interest rates. Gold loans come with interest rates of up to 24% per annum.

Meanwhile, personal loans can have interest rates of around 11% to 15%. But the interest rate on personal loans will be influenced by the eligibility and creditworthiness of the borrower.

Documentation

You will have to submit basic documents like identity proof, address proof, ownership proof, and other documents according to the lender’s requirements for personal loans. Some common documents required include a PAN card, Aadhaar card, Voter’s ID, driver’s license, income proof, and bank statements.

But gold loans are a secured form of financing with minimal documentation requirements. You can get gold loans without submitting your income proof because you will have to provide gold assets as collateral.

Tenure

The tenure of personal loans can range from one to five years. But you will usually find a gold loan with a tenure of three months to three years.

If you are looking for a longer tenure, personal loans are your best option. The long tenure of a personal loan ensures that the borrower can easily repay it. The flexible tenure also ensures that borrowers can maintain a good credit score and manage their expenses well.

Processing Speed

Gold loans might have a long processing time. Borrowers will have to submit their KYC documents and hand over their gold assets before getting a gold loan. The loan gets discharged only when the lender completes the valuation.

But you can easily get an instant personal loan. You will have to submit the application online and provide the required documents, and the loan will get approved instantly. It will ensure that the funds reflect in your account within a few hours.

Gold Loan Vs Personal Loan: What Should You Choose?

Gold loans and personal loans have their own advantages and disadvantages. You should weigh the two options against each other before making your choice. But remember that you will need gold assets to get a loan against it, while you don’t need any collateral for personal loans.

In today's fast-paced world, financial needs can arise unexpectedly. In these circumstances, personal loans can be a useful tool because they provide quick cash to cover a range of expenses. However, when additional financial requirements arise, borrowers often find themselves pondering between two options: taking out a personal loan or opting for a top-up on their existing personal loan. Each option comes with its own set of considerations, thus understanding the difference between them is crucial to meet your financial requirements.

Understanding personal loans

A personal loan is an unsecured lending option, which does not require any collateral. While determining personal loan eligibility, lenders take into account several factors, including income, credit score, and repayment history. Online personal loans are simple to obtain. All you need to do is complete an online form and attach the necessary paperwork. Once the lender reviews and approves your documents, the loan amount will be transferred to your account. With lenders like Bajaj Finance Limited, the personal loan disbursal process is convenient, hassle-free, and requires minimal documentation.

Understanding top up loans

A top up loan is taken over and above an existing loan. The existing loan could be a personal loan, a home loan, or any other type of loan. It is commonly believed that top up loans can only be used for home loans that already exist. That is not true, though. Top up loans can be used to take over various loans such as personal loans, as long as your lender has a top up loan facility available. However, there can be certain requirements to be met to be eligible for a top up on a personal loan. For instance, to qualify for a top up personal loan, the borrower must have made a particular number of EMI payments on his current loan.

Let us discuss some key factors that make personal loans and top-up on personal loans distinct from one another:

1. Source of borrowing

• Personal loan: You can avail of a personal loan from any lender, as long as you meet their eligibility criteria and can submit the required documents.
• Top-up loan: It can be availed only over and above your existing personal loan from the same financial institution. If you want to avail of the top-up from another lender, you need to transfer your existing outstanding loan to the new lender.

2. Tenure

• Personal loan: The tenure of personal loans varies depending on the lender. With Bajaj Finance Limited, you can repay the personal loan comfortably over a tenure of up to 96 months
• Top-up loan: A top up loan's tenure can be adjusted and is often the same as the term of your current personal loan.

3. Interest rates

• Personal loan: The personal loan interest rates depends upon the lending institution. For instance, we offer personal loans with an interest rate starting from 11% p.a. Personal loan's interest rate is also influenced by variables including your income, employment history, age, credit score, etc.
• Top-up loan: Since you are availing a top-up on your existing personal loan, you can negotiate the interest rate with your lender.

4. Processing time

• Personal loan: The processing of a personal loan takes a while because the lender runs a thorough background check, which ranges from verifying personal loan documents, credit score, previous loan repayment history, income source stability, age, etc.
• Top-up loan: Since the lender already has your repayment history and verified documents, the processing time for your top-up loan is simplified. Lenders typically prefer to provide a top up on a personal loan to borrowers who pay their EMIs on time.

5. Maximum loan amount

• Personal Loan: The amount of the personal loan a borrower can get varies from lender to lender. However, factors like your credit score and other eligibility conditions do have an impact on the loan amount. With Bajaj Finance Limited, you can borrow funds of up to Rs. 40 lakh with minimal documentation.
• Top-up loan: A top up loan is usually a fixed percentage of your existing personal loan. Depending on the lender and the type of existing loan, the loan amount could change.

In conclusion, the choice between a personal loan and a top-up on an existing personal loan depends on individual circumstances and financial requirements. Both options have their advantages, and you should carefully understand the pros and cons before planning. It is crucial to choose a loan that aligns with your financial goals and allows you to manage debt responsibly while meeting your immediate financial needs. Using our financial tools like the personal loan EMI calculator and interest calculator can help you in making the correct decision that suits your financial situation.

Is it better to top up a home loan or personal loan?

Topping up your mortgage will typically cost less than taking out another type of loan because home loans generally offer lower interest rates than credit cards and personal loans. However, topping up your home loan also means you're taking on more debt and may increase your loan repayments.

Which one is better gold loan or personal loan?

Interest Rate If you compare the gold loan vs personal loan interest rates, you will realize that both of them offer attractive interest rates. Gold loans come with interest rates of up to 24% per annum. Meanwhile, personal loans can have interest rates of around 11% to 15%.

Which loan is better top up or personal loan?

Compared to personal loans, top-up loans have lower interest rates. As personal loans are unsecured, they have a high-interest rate. Unlike top-up loans, which use your home as collateral, they are offered at a lower interest rate.

Which option is best for loan?

Top Personal Loans Plans in India 2023.