Gold Loans vs Traditional Loans

 Nowadays where there is a huge amount of economic uncertainty globally, there is a massive growth in securing loans and financing. A good understanding of the various options that are available can be a huger asset during these times. Let’s delve deeper into understanding the differences between Gold loans and traditional loans (personal loans, home equity loans, auto loans, etc.).

 What Are Gold Loans?

 To start off, lets understand what Gold Loans really are and how they work. A Gold loan, or also coined as Gold-Backed financing is when one pledges their Gold (coins, bullion or jewellery) as collateral to borrow money from a lender. The loan amount is determined based on the amount of Gold deposited, its purity, and value. Then based on the value, the lender will assign a percentage of the Gold’s market value based on the time of the application. These loans offer a quick and easy solution to accessing money through your Gold assets with the benefit of not having to sell the asset which has the potential to go up in value in the years to come.

 Traditional Loans Explained

 We are quite familiar with traditional loans, such as auto loans, personal loans and home equity loans and more. These loans can be secured loans or unsecured loans. A secured loan would require a form of collateral, such as a house or a car, whereas an unsecured loan would do not have any collateral such as a personal loan. Moreover, these loans are approved and provided based on the borrower’s creditworthiness, financial history, income, and various different factors. In short, it is a lengthier process in order to get access to money with traditional loans.

 Key Differences Between Gold Loans and Traditional Loans

 Approval Speed: Gold loans are typically processed significantly quicker than most traditional loans because their main requirement is having Gold as security, while traditional loans must go through a lengthier approval process in order for the borrow to get access to funds.

 Loan Amount: The amount of the money approved for each loan varies, when it comes to Gold loans, it will be dependent on the amount of Gold pledged, and its market value at the time which may limit the borrowing capacity. Whereas with traditional loans, based on a multitude of factors you can be approved for a higher amount.

 Loan Tenure: Gold loans are typically more flexible and tend to have shorter repayment periods, like on year, than traditional loans. Some auto loans can go for as long as 8 years and some home mortgages for 30 years. These longer loans can lower the monthly payment, however, they also require a longer commitment.

 Collateral: The main difference that lies between a Gold loan and some traditional loans is the collateral factor. Gold loans will always require you put Gold as security, whereas some traditional loans like personal loans may not require you to put anything for security.

 Advantages of Gold Loans

 Quick access to funds: Perfect for urgent financial needs.

No credit checks: The value of your Gold is what is at stake, making it an ideal way of accessing funds without hurting your credit score.

Flexing payment options: These terms are subject to each lender, however AU Bullion offers very flexible payment plans for you to explore.

 Advantages of Traditional Loans

 Access to higher loan amounts: Based on a multitude of factors, you can access a larger amount of money which can be beneficial for things like auto loans and mortgages.

Longer terms: This allows for smaller monthly payments on the large loan.

Build credit score: Paying off these loans on time will help to build your credit score which will be beneficial for future financial needs.

 Choosing Between Gold Loans and Traditional Loans

 When going into any sort of loan you need to consider various different factors. These include the urgency for the funds, the amount required, your credit score, and your income to repay the loan. Traditional loans are better suited for larger and long-term financial goals, whereas Gold loans are the perfect option for short-term solutions for immediate financial needs without impacting your credit score.

 Get a Gold Loan Today!

 AU Bullion is excited to announce that we are now providing Gold-backed financing. As usual we are offering some of the most completive rates on your Gold assets and will provide you with flexible financing terms. For more information and to get started please reach out to our head office by calling +1-905-605-6757. Our team of experts will assist you in securing your Gold loan.