How does a gold loan top-up differ from a personal loan?

A gold loan top-up differs from a personal loan in a few keyways:

1. Purpose: A gold loan top-up utilizes the remaining value in already pledged gold ornaments to provide additional funds as per the borrower's needs. On the other hand, a personal loan is an unsecured loan given for various personal needs without requiring any collateral.
2. Collateral: While gold jewellery acts as collateral in a gold loan, a personal loan is an unsecured borrowing option that does not require any asset as security.
3. Interest Rates: Gold loan top-ups typically have lower interest rates than personal loans, as gold acts as collateral. Personal loan rates are higher, given the lender's increased risk due to no backing asset.
4. Eligibility criteria: Gold loans have relatively simple eligibility criteria related to age, identity proof, pledged gold value, etc. Personal loans can have more stringent income, credit scores, and company policy-related eligibility norms to qualify.
5. Tenure: The maximum tenure of a gold loan top-up is usually within 2-3 years, similar to the original loan. Personal loans can be taken for longer durations, typically between 1 and 5 years.
6. Approval and Disbursal: Gold loan top-ups typically require minimal documentation, and existing gold valuations can be leveraged to get faster approval and disbursal within hours. Personal loan processing can take up to 1-2 weeks, depending on lender verification procedures.