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When you need money urgently for a medical emergency or business, you usually have two main options: Sell/Pawn your gold or borrow from a bank/loan app.
In Nigeria, we love gold. But should you use it to get cash?
What is a Gold Loan?
A gold loan (or pawning) is where you give your gold jewelry to a lender (like a Pawn Shop or specialized Gold Buyer) as collateral. They give you cash instantly.
- Speed: Instant (Exchange gold for cash).
- Documents: Minimal.
- Risk: If you don't pay back, they sell your gold.
What is a Personal Loan?
A personal loan is unsecured money from a bank (GTB, Access) or a loan app (FairMoney, Carbon).
- Speed: 5 mins (Loan Apps) to 7 days (Banks).
- Documents: BVN, NIN, Bank Statement.
- Risk: High interest, defamation (if loan app).
Key Differences
| Feature | Gold Loan (Pawning) | Personal Loan (Apps) |
|---|---|---|
| Interest Rate | High | 3% - 30% monthly |
| Speed | Instant | 5 mins - 24 hours |
| Collateral | Yes (Gold) | No (BVN) |
| Credit Score | Not Required | Required |
| Worst Case | Lose Item | Blacklisting |
When to Choose Which?
Choose Gold/Pawning If:
- You are blacklisted: Loan apps won't lend to you because of bad credit.
- You need cash NOW: Physical exchange is immediate.
- You don't want debt records: It doesn't affect your credit report.
Choose a Personal Loan If:
- You have a salary: Salary earners get cheaper rates from banks.
- You don't want to lose your gold: Jewelry is an appreciating asset in Naira terms. Selling it to pay a debt is painful.
Conclusion
In Nigeria, Personal Loans (from reputable banks) are usually better because you keep your gold. Gold is a hedge against inflation. Only pawn your gold as a last resort.
Use our Loan Calculator to check the cost of a personal loan before you sell your family treasures.
Written by Calc Labo Research Team