Gold loan allows you to avail loan against gold at lower interest rate. Here your gold is considered as the collateral against the loan borrowed. Gold loans have in the recent past become quite popular and today, many financial institutions are offering gold loan at lower interest rates. The loan amount which is sanctioned depends on the lender and amount of gold you are depositing as collateral; however, the range is from Rs 1500-2100 per gm of gold.
When compared to personal loan, gold loan does not involve any charges such as processing fee or pre-payment charges which are to be paid in case of personal loan. And, gold loan offers a higher loan limit than the personal loan with lower interest rate. The more security you attach, the lower are the interest rates for a gold loan, making it widely acceptable. Thus, if it is about small amount of money borrowing, go for personal loan else if you have saved gold jewellery for a rainy day, opt for a gold loan.