You can use the financial support banks lend for almost anything from international travel to a medical emergency. So, there are several kinds of resources that you may have that come in handy while taking the loan for generic financial requirements. One of the resources is loan. However, it is important to know the purpose of taking a loan. You need to compare factors like interest rates, eligibility criteria, processing fees, prepayment penalties, etc. before applying for any one of these emergency loans. Many of the loans are easily available, which is basically divided into two types: secured and unsecured loans. The most common and popular secured loan is Gold Loan.
This type of loan against gold uses it as the collateral deposit, which needs to be kept with the bank in order to obtain a loan. This loan has lower interest rates but the risks are extremely high. In case a default occurs, you could risk the loss of ownership of the gold you have. However, the gold loan is the most favorable emergency loan in India.
As most Indians traditionally and culturally keep a lot of gold for various occasions like wedding gifts and investments. An emergency loan can be processed as the loan against idle gold. Most leading banks like provide gold loans for excellent interest rates that range between 12 – 16%. You can use gold to secure an emergency loan based on (Loan to value) LTV ratio. This may be higher than the other type of loans; however this proves to be very beneficial when a high amount of loan is needed.
In the personal loan, you need not pledge any security or collateral. Personal loans are easy to handle, fast and hassle free, thus proving to be an ideal option for emergency financial requirements. Since it doesnt require any collateral, one can get a personal loan as easily as clicking a button.
Compared to gold loan, personal loan has higher interest rate. Though, most banks offer competitive rate between 14 to 25%. However, it is processed much faster. If you provide all the documents necessary, organizations like HDFC bank sanction and credit the loan amount in your account within 24 hours. The most important thing it can do is to help you escape the crisis or the need. So, whether you have time to opt for gold loan or have a good credit score for the personal loan, these financial products are designed to evade the financial need.