Interest rates are much higher in the case of other loans, particularly personal loan. For example, interest rates vary from 12.75 per cent to 19 per cent, while in the case of gold loans the interest rate is as low as 12 per cent per annum.   This makes gold loans a much better proposition, when compared to other loans. If the amount is rather large, the saving by way of lower interest rate can be enormous. It is therefore advisable to take a gold loan.

Since gold loans are given instantly in lieu of physical gold, most banks and NBFCs choose to waive off processing fees. This is all the more because, the physical gold is considered as a collateral, which the bank already keeps with itself for a certain duration.

If you want to avail a loan, usually banks or financial institutions check for a credit history. If your credit history is low, they often reject loans. However, in order to avail gold loans, no such thing is required. Since the person availing loan needs to deposit physical gold with the bank, the latter does not demand credit history.