According to a statement from the Reserve Bank of India, financial institutions may now lend up to 75% of the value of gold jewellery. This high LTV (loan-to-value) ratio is what most borrowers aim for to increase their borrowing capacity and reduce the impact of unexpected financial emergencies. Via rupeek gold loan or other financial institution gold loan and pledging the highest purity of gold ornaments, people might get a significant loan amount without going through the inconvenience of selling their gold jewellery.
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What is a gold loan?
A loan against gold jewellery or ornaments is a secured credit option that borrowers can take advantage of by pledging their gold jewellery with a purity of 18K to 24K gold as security. The sanctioned rupeek gold loan amount is a percentage of the current market value of the gold that was pledged. One of the simplest and quickest ways to get money in an emergency is to apply for this kind of secured loan. Due to the rising demand for this form of credit, numerous lenders are now providing gold loans at attractive gold loan interest rates.
How is the maximum gold loan value determined?
Over the years, India’s annual demand for gold has only sharply climbed; this tendency doesn’t appear to be changing anytime soon. The sanctioned loan amount in lieu of gold jewellery is determined by taking into account a number of factors. The purity and weight of the gold that is being pledged are assessed by the lenders; the gold’s current market value is then calculated.
Lenders can only approve up to 75% of the market value of the gold that is pledged. For instance, the sanctioned loan amount you will receive will not exceed Rs. 3 lakh if you are pledging gold jewels worth Rs. 4 lakh. Additionally, the loan tenure, the form of gold, and the borrower’s ability to repay the loan will all affect the LTV ratio that is allowed.
The information given above must have given you a better understanding of the factors lenders take into account when determining the gold loan value. Let’s talk about each of them individually now:
Loan-to-value (LTV) ratio: A loan-to-value ratio is essentially an evaluation of the lending risk that lenders do before accepting any secured loan application. It is the percentage of the value of the collateralized asset that a financial institution can lend to a borrower. Since the RBI has set the maximum LTV ratio for gold loans at 75%, a lending institution can only offer a maximum of Rs. 75 for collateral valued at Rs. 100. This means that a borrower will have to commit more gold as and if the price of gold declines in the market. In this case, people can estimate the loan amount beforehand by using an online gold loan calculator.
Purity of gold: The amount of the loan granted is largely influenced by the quality of the gold jewellery offered as collateral. Gold jewellery quality is expressed in karats (K), which range from 18K to 22K. The alloys copper, cadmium, zinc, and silver present in 22K gold make it resistant to damage.
A piece of jewellery pledged with 18-carat gold will weigh less than one with 22-karat gold, and vice versa. Basically, those who pledge 22K gold jewellery will receive more money than those who pledge 18K jewellery (considering that the weight is identical).
Weight of gold: When approving a loan, one important factor that lenders take into account is the gold’s weight. Only the quality and weight of the gold will matter. In the case of jewellery with valuable stones set in them, the price of valuable jewels won’t be considered. Any stones or jewellery attachments must be taken out in order to determine the actual value of the gold. Pledging ornaments with more gold in them can help people get more money. However, in order to be eligible for a rupeek gold loan, one must put up a minimum of 10 grams of gold as security.
Form of gold: It’s important to keep in mind that lenders do not accept gold bars or gold bullion as collateral when pledging gold for money.
Jewellery with stones: Only the weight and purity of the gold, as previously stated, determine the loan amount. When weighing gold jewellery, diamonds, precious stones, or gems embedded in the jewellery are not taken into account.
Gold’s current per-gram price: The market price of gold fluctuates daily because it depends on a number of external factors. The average gold price per gramme over the previous 30 days must be used by lenders to calculate the value of the gold in accordance with RBI regulations. For instance, if the average market price for one gramme of gold over the previous 30 days were Rs. 4,200, then the price per gramme for a 22K gold ornament would be Rs. 3,850, or Rs. 4,200 x 22 = Rs. 92,400/24.
Eligibility
The sanctioned gold loan amount is determined by additional criteria in addition to those listed above. To be eligible for a rupeek gold loan with low gold loan interest rates, you must fulfil the lender-specific eligibility criteria. Borrowers just need to meet very simple requirements in order to qualify for a loan against gold jewellery:
– Must be older than 18 years of age.
– Applicants must have an adequate amount of gold.
This makes a rupeek gold loan an ideal funding option for borrowers who are in desperate need of cash but are unable to meet the strict requirements attached to other sorts of loans.
Interest charges
Another important factor is the gold loan interest rates. The gold loan interest rate may differ from one lender to another because it is based on the creditor’s risk assessment. In addition, the loan tenure and the loan amount are important factors in determining the interest rate for a gold loan. The risk for lenders increases with a larger LTV ratio. Lenders may charge higher gold loan interest rates in such circumstances.
Well-known lenders like Rupeek offer low gold loan interest rates on gold loans.
Additional charges: In most cases, reputed lenders often don’t charge anything for the early repayment of gold loans. However, some may charge up to 2.25% for a loan foreclosure.
A gold loan is an ideal option for those looking for hassle-free loan applications. A borrower’s credit score is not taken into account when approving the loan amount for gold loans, and there is little paperwork required. If you have idle gold jewellery in your home, opt for a gold loan. If the safety of your pledged asset is holding you back from applying for a gold loan, there is no need to worry. When handling your valuables, such as gold jewellery, reputable gold loan companies provide complete security. Therefore, to obtain finances as soon as possible in difficult times, pledge your gold jewellery. There are no end-use limitations. Therefore, borrowers can pay all types of expenses via gold loans. Before choosing a lender, potential borrowers must do a thorough market analysis.
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