You have to jump through hoops to get a personal loan during times of crises. The other easier option is to get gold loans Melbourne. If you have gold to trade or put up as collateral at a pawnbroker, you can get the cash you require immediately. A gold loan can be a better option than a personal loan when you are cash strapped and in need of access to cash. We can look at these two different types of options.

What is a personal loan

A personal loan can be given by a bank or some other formal and traditional financial institution. To be eligible, a financial institution will have to assess tour ability to repay the loan in time. Personal loans are often given to people who have a salary or are self-employed. The loan can be used for anything ranging from medical expenses, home improvement projects or paying for marriage expenses. How is it different from getting a loan against any gold you may have.

What exactly is a gold loan?

A gold loan can be accessed through a gold dealer. You will be required to provide gold jewellery as collateral. Getting a gold loan is similar to a pawnbroker,it involves offering collateral in the form of gold. The gold loan will be based on the quantity of gold in any piece of gold you have to sell. Gold loans can be used for any purpose. There are no stringent prerequisites. You don’t need to be employed or to have a good credit history because gold loans are secured against the asset only.

When you get a loan against your gold, you don’t have to provide any guarantors. The loan provider will not verify your personal documents except your ID, of course. Because there are so few things that go into the processing of a gold loan.

Interest Rates

Interest rates for gold loans Melbourne are within 12% and 35% depending on the value of the loan. With personal loans, you can expect to pay 18-34% in interest. The difference between the interest rates charged by banks or gold dealers and pawnbrokers who offer gold loans is quite significant – a personal loan will end up costing you than a gold loan.

Repayment period

Typically, repayment on personal loans varies between 1 and 5 years. This means you can pace yourself to be able to repay your loan within 5 year. However, in all that time you will be accumulating debt. Gold loans, on the other hand have a shorter tenure, usually a 12 monthduration. If you can repay a loan within a short space of time, then gold loans Melbourne are what you should be looking for.

There is a catch. When you sign a loan agreement, you commit to a specific tenure. A bank will charge you for paying off your loans earlier than when the agreement speculated. You would think, a bank would be more encouraging of you paying back your debt early, but early repayment reduces the amount of interest they would have earned on your loan. With gold loans, things are different. If you do manage to pay off your loan earlier, you will not be subjected to the same pre-payment charges. You can pay all the loan back in one go.

To summarise:

Gold loans have the following advantages: –

– Quick processing with gold as collateral

– There is no additional paperwork required

– It is costly to process a conventional bank loan than it is to quantify gold loans

– The interest rates on gold loans are significantly lower

– Gold loans offer more flexibility than conventional bank loans

Considering the features that each type of loans have and the benefits, it is clear that gold loans are best compared to conventional personal loans.