If you need to borrow money, you can consider taking a loan against your precious jewelry. The amount of the loan depends on the weight and size of your jewelry. To be sure of the exact value of your jewelry, consult an expert in fine jewelry. Certified gemologists can assess the true value of your jewellery. Make sure that the gemologist you are consulting is a member of the GIA. This way, you will receive the right loan amount for your precious pieces.
Loan to value ratio
A Loan to Value Ratio (LTV) against jewellery is the percentage of the total loan amount that is based on the current market value of the item. This figure can be anything from small to high, depending on the type of gold and the value of the item. Lenders maintain a cap on how much they can disburse against an item. A higher Loan to Value Ratio means you can take out less than you think your item is worth, while a lower Loan to Value Ratio means that you’ll have to pay less in interest.
As gold prices have declined from their peaks, the LTV ratio has become more restrictive. This means that even if a gold ornament is worth Rs 40,000, the bank will only lend you seventy-five percent of its value. In order to increase the LTV, the RBI has raised the cap to 75%, which is higher than the previous seventy percent limit. While this limit is not high, it does indicate that the market has been stabilized and borrowers can get a loan worth up to a higher amount.
Interest rates
Loans against jewellery allow you to borrow up to a certain amount and can vary considerably from bank to bank. A bank can only lend up to Rs 75 lakhs, while non-banking companies lend in smaller amounts and do not charge any processing fee. However, borrowers must consider the amount they are willing to risk and the credibility of the financing company before applying for a loan. A gold loan can be a good option for those with a poor credit score as they can deposit their jewellery with the bank as collateral.
There are a few factors that determine the interest rate on a loan against gold. First, the value of the gold itself will affect the loan amount. Gold articles that are less than 18 carats will not be accepted by banks. The amount of gold jewellery you can borrow is determined by its purity and quality. The amount of interest you will pay will depend on whether the gold jewellery is 18 or 24 carats. You will not receive the value of precious stones embedded in gold jewellery.
Repayment terms
Repayment terms for loans against jewellery vary, but in general, they can range from twelve to 24 months. You can also choose to repay the loan in installments or in full at maturity. The amount you pay back can depend on the amount of interest you are charged. However, you should know your exact repayment schedule in advance. If you can afford to repay your loan in three or four installments, you may save money on interest costs.
Repayment terms for loans against jewellery differ from bank to bank. A short term loan is offered to individuals who need cash immediately, but a long-term loan will be more suitable for those who want to enjoy longer repayment terms. You may opt for a loan against gold if you want instant cash loans on jewelry, or you might be looking to upgrade your jewellery and sell it to increase your equity. Generally, interest rates for loans against jewellery start at 9% and go up to 20%, depending on your eligibility criteria.
Approval process
In recent times, the government has eased the approval process for loans against jewellery by increasing the permissible loan to value ratio (LTV) for gold ornaments and jewellery. This relaxation will be valid till March 31, 2021. The increase in LTV will allow household to borrow more money without selling their gold to access liquidity. However, the approval process will take longer than a conventional loan. This is because gold and jewellery have high intrinsic value, and banks require collateral before sanctioning the loan.
The approval process for loans against jewellery involves extensive documentation and credit checks. If the loan is approved, the money is transferred directly to the borrower’s bank account. The total time between the application and approval is anywhere between half an hour to an hour. The approval process can take up to an hour, depending on the lender’s requirements and the borrower’s credit score and repayment capacity. While gold loans can be an excellent way to boost your business, they aren’t a quick fix for cash shortages.
