Gold Loan Vs. Loan Against Property - What Is The Difference?

Gold loan & loan against property (LAP) are two different loans that help you avail immediate funds. Know the difference & choose the one which suits your needs!

30 Aug,2022 08:09 IST 557 Views
Gold Loan Vs. Loan Against Property - What Is The Difference?

Loans are one of the most convenient ways to bridge the gap between you and your cash needs. However, with the wide variety of options to select from, it can get confusing to choose the best one for you. This article elaborates on the difference between a loan against gold and a loan against property to help you make an informed decision.

What Is A Gold Loan?

Gold has been a saviour for many Indians, from weddings to festivities to tough times. People’s trust in gold has made it as valuable as it is today. It is popularly known as a haven for various reasons, the most influential motivation being its liquid nature. It is easy to convert into cash and get a gold loan.

A gold loan or a loan against gold is a secured loan taken to fulfill short-term or long-term cash needs. Here, you pledge your gold valuables as collateral. The approved loan can be up to 90% of the current market value of the committed gold, as per the Reserve Bank of India. The gold applicable for pledging can range from 22-24 karat.

What Is A Loan Against Property?

As the name suggests, a loan against property means availing of the loan against your property, commercial or residential. It has a longer tenor of up to 18 years with a loan-to-value (LTV) of 75% of the property’s market value. Typically, the interest rate on loans against property is low compared to other loans.

What Is The Difference Between A Gold Loan And A Loan Against The Property?

Both gold loans and loans against property have their advantages and disadvantages, including the following:

1. Purpose:

A loan against gold is ideal for short-term cash needs, whereas a loan against property is helpful if you need a higher loan amount.

2. Loan-To-Value:

LTV for gold loan can go as high as 90% of the pledged collateral, whereas the LTV of a loan against property is up to 75% of the property value.
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3. Tenor:

A gold loan tenor can range from three months to two years. A loan against property ranges from 2-18 years.

Apply For A Gold Loan With IIFL Finance

IIFL Finance is a leading gold loan lender. Since its inception, it has achieved a hassle-free experience for various gold loan borrowers. We have successfully provided a loan against gold to 6 million satisfied customers who received their funds hassle-free.

IIFL offers competitive gold loan interest rate and flexible repayment terms for short-term gold loans. We also ensure the safety of your collateralized physical gold until you repay the required amount. Furthermore, there are no additional costs when you redeem your gold mortgage.

Getting a gold loan has never been easier! Walk into any of our branches pan India, fill out an e-KYC and get your loan approved in under 30 minutes.

Frequently Asked Questions

Q.1: What is a gold loan?
Ans: A loan that you avail of against your gold ornaments or articles is known as a gold loan. In this type of loan, gold acts as collateral.

Q.2: What is the difference between a gold loan and a loan against property?
Ans: The evident underlying difference in both types of loans is the collateral involved. One keeps gold as collateral, and the other holds residential or commercial properties as collateral.
Another difference lies in the purpose of the loan. A loan against gold is ideal for short-term (3 to 24 months) cash needs, and a loan against property is helpful for a higher amount of loan with a longer tenor.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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