If you are looking to buy a car, then go for a car loan or a jewel loan. Both a car loan and a jewel loan (gold loan) have their own set of advantages and can be applied for based on a person’s needs and requirements. It's up to you to analyze it to pick the best.

The following are the comparison of the car loan and a gold loan based on certain criteria like interest rate, credit score, repayment tenure, & loan amount. 

Interest rate:

Be it a car or a jewel loan, you need to check the interest rate offered by the lenders. The  car loan interest rate starts from 7.00%. The lenders providing a car loan will look through your credit profile. In the case of a  gold loan, the interest rate starts from  7.35% p.a. is low compared to other loans. If you do not have a good credit score, the lender will  charge a higher interest rate. In such a case, you can opt for a gold loan that doesn't require a credit score as it is a secured loan. It also has a reasonable interest rate of just starting from 7.35% p.a. This rate can differ from one bank to another.

Loan amount:

To purchase a car, you need to consider the loan amount you wish to borrow. If you have sufficient gold in the form of coins or jewelry to pledge, you can go for a gold loan as they arrive at a low-interest rate. But, in the case of a gold loan, only 75% of the gold’s market value is given as the loan amount. If this does not suffice for buying a car, you can do it for a car loan as there are banks that offer up to 1 crore for purchasing the vehicle.


In the case of a car loan tenure, the maximum loan tenure given by the lender to repay your loan is 7-8 years. But the gold loan tenure  is comparatively less than a car loan. The maximum loan tenure would range from a few days to a few months. In some cases, gold loan tenure can go up to a few years. However, this would be under the control of the bank.

Credit score

If you plan to avail of a car loan, make sure you have a credit score of above 750. The lender will look into your credit history to check whether you are a creditworthy person. So it is important to have a good credit score and repayment history. But in the case of a gold loan, the lender may not consider your credit history before providing you a loan. Your poor credit history may not impact your eligibility to avail of a gold loan.

All you need to do is to  make your decision based on the loan amount, interest rates, tenures, and credit score that suit your needs.