How Does a Gold Loan for Education Compare with Other Education Financing Options?

Gold loans offer a unique financing alternative for education compared to traditional education loans. Here’s a concise comparison based on extensive research across banks and non-banking financial companies (NBFCs) in India:

• Interest Rates: Gold loans for education typically have interest rates ranging from 9% to 15% per annum, depending on the lender and the value of the pledged gold. In contrast, unsecured education loans generally have rates between 8% and 15%, with some private lenders charging higher rates.
• Approval Process: The approval process for gold loans for education is generally much faster, often completed within hours due to minimal documentation and reliance on gold valuation as collateral. Education loans usually involve a lengthy application process, requiring extensive documentation and credit checks.
• Eligibility Criteria: Gold loans for education usually have less stringent eligibility requirements, primarily assessing the value of the gold pledged rather than the borrower’s credit history or income. Education loans typically require proof of income and a good credit score.
• Repayment Terms: Gold loans for education typically allow for interest-only payments during the study period, with principal repayment at maturity. Education loans typically feature a moratorium period, but interest may accrue during this time.
• Loan Amounts: Gold loans for education can provide up to 75% of the market value of pledged gold, with amounts ranging from ₹10,000. Education loans typically start from ₹20,000 and go up to ₹50 lakhs or more.