Personal Loans vs. Gold Loans: Understanding the Best Option

May 29, 2024
 |  1 min read


In the world of financial solutions, personal loans and gold loans are the two most popular ways of obtaining funds for people who need them to meet different needs. Although both of them are used for the same purpose, which is liquidity, they work on different principles and are for different situations. 

Let's explore the details of personal loans and gold loans, analyzing their features, advantages, and the cases in which they can be applied. 

What are Personal Loans and Gold Loans?

Personal loans and gold loans are a type of loan for emergency that are based on the individual's income and the value of their gold. Let’s understand in detail what are personal loans and gold loans.

A.  Personal Loans:

Personal loans are unsecured loans which are given by banks, credit unions, or online lenders. These quick loans online are usually based on the borrower's creditworthiness and ability to repay.

B.  Gold Loans:

Gold loans are the other type of loans that are secured loans in which gold jewelry or ornaments are pledged as collateral. The loan amount is determined by the value of the gold which is offered as a security.

Why Consider Personal Loans Over Gold Loans?

The following reason explains why consider personal loans over gold loans to pay for big expenses like house repairs, medical emergencies, or debt consolidation.

A.  No Risk of Losing Gold:

One of the main reasons people choose easy cash loan online instead of gold loans is the fact that they do not have to give up their collateral. Personal loans allow borrowers not to lose their precious gold assets in case of default.

B.  Larger Loan Amounts:

Personal loans usually provide bigger loan amounts than gold loans. As personal loans are not limited by the value of the collateral, the borrowers can get more money to meet their financial needs.

C.  Flexible Use of Funds:

Personal loans helps the borrowers to use the money for all kinds of needs. Personal loans can be used for paying off credit card debt, funding a vacation, or covering wedding expenses which makes them quite versatile.

How do Approval Processes Differ Between Personal Loans and Gold Loans?

Personal loans are mainly based on the borrower's creditworthiness. The lenders check the credit score, the income stability and the debt-to-income ratio of the borrower. So how do approval processes differ between personal loans and gold loans?

A.  Credit Score Focus:

A good credit score greatly improves the possibility of loan approval and may also make a borrower eligible for lower interest rates. On the other hand, gold loans are mostly secured by the collateral offered, so credit scores do not play a significant role in the approval process. 

B.  Faster Approval for Gold Loans:

Although personal loans may need a lot of documentation and verification procedures, gold loans usually go through the approval process faster. This makes gold loans a perfect solution for people who are in need of immediate funds or those with a bad credit score. 


The debate on the decision between personal loans and gold loans is not a one-size-fits-all matter. All the options are good and they are suitable for different financial situations and preferences. Personal loans are the most suitable choice for most borrowers as they are flexible, have higher loan amounts and do not risk their valuable assets.

mPokket can help you to get a loan for emergency. The borrowers can make the right decisions that suit their needs and situations after knowing the specific features and advantages of each of the options.

Gaurav Jalan

Gaurav Jalan is the Founder and CEO of mPokket, a digital lending platform serving underserved Indian youth. He leverages technology and experience to deliver cost-effective credit to marginalized populations. In his role, he provides strategic direction and oversees execution to fulfill mPokket's mission.