The quickest financial fix of a sudden emergency is to go for a gold loan. The gold that generally remains ideal either in your wardrobe or in the locker of the bank can be your savior in the time of crisis. You can get a loan that is equal to the 80% value of the pledged jewelry or other gold items. Though the percentage of the loan you can receive varies from one bank to another.
Any Indian resident can apply for this type of loan. When you take any of your gold items to the issuer of the loan, at first, they will thoroughly examine these articles. They will also judge their present Market value based on which they offer you the loan amount. If you agree with their offerings along with other charges, then you can start preparing your legal documents. After submitting the proper document, the loan amount transferred post-approval of the bank. And the gold articles remain with the lender until you pay back the loan along with interest. Various gold loan Eligibility calculators help you to find out whether you can apply for these types of loans or not.
Things You Should Consider While Applying For Gold Loans
Do Research On Offers And LTV
While you are applying for a gold loan, it becomes imperative to do proper research on different values various banks are offering per gram of gold. For these, you need to find the current market value of 22-carat gold on the date of application. It is crucial information that you cannot skip as it determines your eligibility for the loan. Another crucial factor that affects the value of gold per gram is Loan To Value Ratio.
Calculating these ratios could be a complicated process, so you can opt for an online gold loan eligibility calculator for easier and quicker solutions. The Loan To Value Ratio represents the total amount of loan you can avail by judging your gold assets’ present value. The RBI has state standards for the maximum value of the gold you can get, which is 75%. Thus it means you can get a loan amount that is equal to 75% of the total value of your gold.
So if you want to know how much money you can get as a loan, then it is necessary to understand the per gram rule and LTV ratio.
Formula To Calculate Gold Loans
If you are not accustomed to online gold loan eligibility calculators, you can also calculate it by applying the formula on your own. The gold loan rate available on each gram can be calculated by multiplying the gold particles’ net weight with the ongoing gold rate in the market. In these types of loans, the purity of the gold also plays a crucial role.
Net weight of gold means the actual weight of an item after deducting the weight of other materials and elements present in it. Thus, the formula used for calculating gold rate is –
Gold Loan Amount = Net Weight × Per Gram × Purity Of The Gold.
Another big question while applying for a gold loan is whether you should choose a bank or NBFCs. The decision of these choices either depends on what online gold loan eligibility calculators show or on the fact that which institutions offer better gold loan rates. It rather depends on LTV offered by different banks to its customers, as it could determine the amount of interest you have to pay on a loan. So don’t get overwhelmed with the gold rate; rather, judge by comparing LTV offered by them.