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The reasons to acquire loans vary depending on the individual borrowers. Instead of selling your physical assets, you can avail of loans by keeping it as collateral. Financial institutions offer loans as per borrowers’ requirements. They provide different types of loans with varied repayment options and collateral acceptance to ensure hassle-free loan procedures.

Gold Loan

Gold loans are loans offered to borrowers based on the value of a gold stock they own and offer as collateral. It is a traditional concept with roots in history. Even today, the unorganised lending sector in India involves more gold loans than other types of advances.

Loans are offered against gold jewellery, biscuits, and coins with proof of ownership and purchase receipts. The possession of the gold remains with the lending institution until the loan amount is fully repaid. The value of the gold stock is derived by an authorised expert, according to market standards, and some institutions offer up to 90% of the collateral value as the loan amount.

Read on to know the benefits and best option to avail loans , when considering gold loan vs loan against property. 

Loan Against Property

Loan against property (LAP), by the name, suggests loans acquired based on residential and commercial properties as collateral. These are long-term secured loans spanning years and decades for repayment. The borrower needs complete documents and proof of ownership of the said property to avail of a loan against it. Many trustworthy institutions offer instant Gold Loans and loans against property. You must visit the official website to utilise the loan against property EMI calculator and know what amount you will pay in the form of EMIs.

The loan amount sanctioned in this type of loan depends on the property’s market value. The higher market value may result in a greater loan amount offered as a loan. Many institutions offer secured loans of up to Rs. 5 crores for loans against property. The interest amount is high in loans against property due to the longer repayment tenures.

Gold Loan Vs Loan Against Property: Which option to prefer?

The option to choose between a gold loan vs loan against property depends entirely on the individual requirements. Below are a few pointers describing the difference between them:

1. Loan Eligibility

Gold loans come with easy eligibility criteria for loan applicants. Since the loan amount is lesser than the collateral value, lending institutions give less significance to borrowers’ age, profession and credit scores. In loans against property, the criteria for borrowers are more stringent than in gold loans. The financial stability, credit history, collateral value and borrower’s profession are crucial aspects, to determine the disbursal amount in loan against property. One can also download mobile applications to get information on loan eligibility and utilise the loan against property EMI calculator.

2. Interest Rate

The rate of interest applicable for gold loans is fixed as per institutions, and sometimes the fall in gold prices increases the interest rates on gold loans. On the other hand, the interest rates on a loan against property defer based on the applicant’s credit score, loan amount, and repayment tenure. They can choose various interest rate slabs and loan tenures according to their repayment capabilities.

3. Documentation

The documents needed for gold loans are comparatively fewer in number since ownership receipt, address proof, ID proof, and proper valuation of the physical gold stocks are enough. Contrary to gold loans, a loan against property requires numerous documents proving the ownership, location, market value and more paperwork for properties with multiple owners. Applicants might need government registration as a mandatory document for a LAP.

Loan Processing Fee and Repayment Tenure

Gold loans are recommended for borrowers in need of immediate funds. The loan processing fees levied on gold loans are in the range of 0% to 2% depending on the institutions and loans against property are 2% in general. Usually, gold loans are short-tenure loans which might be repaid within months based on the borrower’s financial stability. Loans against property are decade-spanning loans with higher EMIs compared to gold loans.


A Loan against property might take some time to be approved, whereas gold loans are acquired for immediate requirements. Borrowers in possession of physical gold can easily avail of instant loans rather than waiting for property loan approval for weeks and months. However, for business expansion, property purchase, plant set-up and renovation purposes, the best option for borrowers is a loan against the property since the amount needed is usually higher.

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