Understanding Gold Loans: A Quick Guide
Posted on: 17/Jul/2024 10:09:41 AM
A Gold Loan allows you to use your gold as collateral to receive cash. You can use the loan for various purposes like marriage, education, medical treatment, or business expansion. Gold Loan interest rates are lower than other types of loans, and the processing time is quicker. This guide will show you how to pledge your gold and get a high loan value.
What is a Gold Loan?
A Gold Loan involves pledging gold items, such as jewellery or coins, as collateral. The loan amount is based on the current market value of gold, making it ideal for short-term financing needs. Typically, the loan can be repaid within 6-12 months, with interest rates starting from 10% per annum. At ICICI Bank, you can secure a loan ranging from Rs 50,000 to Rs 1 crore against your gold jewellery.
Calculating the Maximum Gold Loan Value
The value of a Gold Loan depends on the purity and weight of the pledged gold. The Loan-To-Value (LTV) ratio, which ranges from 60% to 75%, determines the maximum loan amount. You can use ICICI Bank’s Gold Loan Calculator to estimate the loan value.
Factors Determining Gold Loan Value:
1. Loan-to-Value Ratio (LTV):
This ratio is crucial for determining the loan amount.
2. Purity of Gold:
Higher purity results in a higher loan value. ICICI Bank offers loans against 24-carat gold jewellery with 99.99% purity.
3. Weight of Gold:
The loan amount also depends on the weight of the pledged gold, with a maximum limit of 50 grams per customer for gold coins.
4. Form of Gold:
Both gold coins and jewellery can be pledged. Jewellery may fetch a higher loan value due to its craftsmanship.
Conclusion
Pledging your gold is an effective way to secure a high loan value. It reassures lenders of your credibility, increasing their confidence in lending you money.
Let`s get started with your Gold Loan journey today!
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