Will Gold Loans Replace Personal Loans? |

Financial magazines, reports and blogs are abuzz with the resurgence of gold loans possibly replacing personal loans. Gold loans are similar to secure loans in all but three ways:

• Gold translates into money very easily. • Gold does not depreciate; in fact it appreciates every year.

• Gold is accepted around the world without being affected by exchange rate (i.e. gold is worth the same in the U.S. as it is in France.)

What does this mean for personal loans…

Secure a Personal Loan with Gold
In essence, if you have gold, you have money. Unlike other forms of collateral, gold is an actual form of currency. When you get an auto loan, you use the car for collateral. However, cars depreciate over time. The same goes for home loans. It is possible, as many people found out, to actually become upside down (owing more than the object is worth) in your secure loan. This does not happen with gold loans. Since gold does not depreciate, you will always have the collateral to back up your loan.

Gold Loans Offer Better Interest Rates
Unsecured loans have enormous interest rates, even for those with good credit. Interest rates for unsecured loans start around 17% and go up from there. However, gold loans offer a low rate of 12%. While a difference of 5% may not sound like much, it can add up over time and can make the difference between affording the loan and not. When you apply the 5% to a $3,000 dollar personal loan, you get an extra $150 a year. For a three-year loan, this can amount to $450. Therefore, when it comes to a personal loan, every percent counts.

A Real Life Example of a Gold Loan
A gold loan is easier to get than you think. Recently, my friend and neighbor received a gold loan. She wanted to get a new car. Most people would get an auto loan, but my neighbor had heard about gold loans; therefore, she wanted to secure one. Now, my neighbor does not own bars of gold. She does, however, own a lot of gold jewelry. It seems she had $60,000 worth of gold jewelry. Therefore, she was able to get a personal loan based on that jewelry. She got a low interest rate and the car.

While a gold loan will not replace all personal loans, for those with gold, it is a good option. Since gold loans offer low interest rates for the borrower and secure collateral for the bank, it is no surprise they are extremely popular.