Gold Loan vs Business Loan
| Sr No. | Features | Gold Loan | Business Loan |
|---|---|---|---|
| 1 | Interest Rate | Gold Loans, being Secured Loans, are offered by various Banks/NBFC at very Lower and competitive interest rates which usually ranges between 10 % to 14 %. Some NBFC charge even higher. |
Business Loans, being unsecured loans, are generally offered at higher interest rates ranging from 14 to 24 % a year. |
| 2 | Time Taken for Loan Sanction and Disbursement |
Gold Loan is a very less time-consuming process. Usually, it takes around 30 minutes to an hour to completely process and disburse the loan. |
It is a time-consuming process. It generally takes around 5 days to 15 days to completely process and disburse a business loan. It also depends on the availability of documents. |
| 3 | Eligibility | You just need to pledge Gold Jewellery (above 18 kt), your Address Proof and an Identity Proof. | Eligibility for a Businessloan is decided on the basis of nature of business, Turnover of Business, Income tax Return, Credit History and repayment capacity of the Business entity. |
| 4 | Loan Amount | The loan amount is decided by the valuer after assessing the Gold jewellery on the basis of quality (above 18 kt.) and quantity (weight in gms.). |
The loan amount is decided by the lender on the basis of Business Turnover, its ITR and its credit history i.e its Repayment capacity to return the loan. |
| 5 | Collateral | As these are secured loans, Gold jewellery is pledged as collateral in order to avail a Gold Loan. |
These loans are unsecured loans i.e offered without any collateral or security. However, before sanctioning the loan, banks check credit score, age and past income statements of the business |
| 6 | Credit history | No Credit history or score is required in order to avail a gold Loan. | A good Credit history or Score is must for an individual in order to avail a business loan. |
| 7 | Income Proof or ITR | You need not provide any Salary slip or Income proof or ITR in order to avail a Gold Loan. |
Income proof or ITR statement is must in order to avail a Business Loan. |
| 8 | Documents required | Very less documentation is required in order to avail a gold loan. You just need to provide a simple address (Aadhar Card/Driving License/Voter ID Card/Passport etc) and Identity proof (Pan Card, Aadhar Card, Passport etc) for KYC. |
Along with Address proof and Identity proof, the borrower is required to present bank account statements of atleast last 6 months, Income Tax Returns of last 3 years, Proof of Business and ownership of the posessions the are used in Business. |
| 9 | Loan Tenure | Gold Loans are usually Short Term Loans. Generally, you can avail a gold loan for up to 1 year which can further be extended to 3 years depending on your requirements. |
Business Loans are usually short term and medium term loans. You can choose the tenure as per your requirement. Generally, Loan tenure ranges between 12 months to 60 months. |
| 10 | Processing Fees | Very Little processing fees or charges are levied by the Banks or NBFC for availing a Gold Loan. Generally, it is NIL to 1 %. |
Business loan indulges high processing fees or charges as compared to a Gold Loan. Generally, it is 1 % to 3 %. |
| 11 | Repayment Options | Gold Loan offers Flexible Repayment Options. Here, you have the optionto pay interest on Monthly, Quarterly, Half yearly or Yearly basis depending upon your Loan plan. You can choose any of the options as per your convenience. |
Business loans doesn’t come up with loan flexible repayment options. You have to repay your loan in equal amount or EMI once chosen as per the tenure of the loan. |
| 12 | Prepayment or Foreclosure Charges |
Generally it depends upon Banks/NBFC.You can close a Gold Loan any time by paying very less or NIL prepayment charges. Normally, it is NIL to 1 %. |
Generally, it is 1 % to 5 %. You have to pay higher prepayment or foreclosure charges as compared to Gold Loan. |
Gold Loan Vs Business Loan
