In case of a financial emergency, people can borrow against their jewellery. They need to understand the gold rate per gram, the quality of the jewellery and its weight.
They should also consider their other assets and liabilities before applying for a loans against jewellery. Moreover, they should keep in mind the KYC norms and checks.
1. Interest Rates
Interest rates on gold jewellery loans vary depending on several factors including your repayment frequency, the total loan amount and external benchmarking. However, they tend to be lower than the unsecured loan rates.
As a secured loan, banks are less worried about your credit history and CIBIL score, which makes it easier for you to avail the loan. They also offer flexible repayment options, so that you can choose to pay the interest as EMIs and only pay back the principal at the end of your loan tenure.
Furthermore, the lender will keep your gold ornaments/jewellery/coins safe and secure until you repay the loan. This way, you can avail funding if you need it for personal or business purposes without having to worry about your jewellery getting stolen. You can also repay the loan EMIs on a monthly, bi-monthly, quarterly, half-yearly or annual basis. This flexibility in repayment helps you meet your specific financial requirements.
2. Repayment Period
Your jewellery is not just a piece of accessory; it is an instant form of backup that can rescue you from financially tight situations. The process of availing a loan against jewellery is extremely quick and simple, especially when compared to other types of loans.
Lenders typically approve you for a loan amount that corresponds to a specific portion of the value of your gold ornaments. The gold is stored by the lender until you repay the loan.
Most lenders offer online gold loan eligibility calculators that help you determine the amount of your gold loan. These calculators will ask for basic details of your jewellery including its purity and weight. The jewellery is then verified by the lender to ensure that it is genuine and meets the required quality standards. Once the gold is approved, the loan is disbursed within a few hours into your bank account.
3. Collateral
Unlike pawn shops that may sell your heirloom jewellery if you don’t make payments, dedicated jewelry lenders keep the collateral in their safe until it is paid back. This helps you avoid long-standing debt and negative credit effects.
The loan amount that you receive from a jewel loan depends on the weight and purity of the gold jewellery that you pledge as collateral. Typically, a non-banking financial company lender or bank will conduct an in-house gold valuation of your collateral and provide you with a loan-to-value ratio based on this. They will also exclude the price of any precious or semi-precious stones embedded in the jewellery from their collateral evaluation.
Another benefit of a jewellery collateral loan is that you do not need to have a good credit score to qualify. Most banks have a lengthy vetting process that requires a plethora of financial documents, while a jewelry collateral loan is quick and easy to qualify for.
4. Documentation
A gold loan is an instant loan option that requires minimal documentation work and is thus convenient for individuals in a financial emergency. One can access the loan amount within a few hours of providing the required documents such as PAN Card, Aadhar Card, Address Proof (electricity bill, gas connection receipt, ration card), and two passport-sized photographs.
The loan against your jewellery pledged is verified for its purity either at the institution’s physical branch or at your home by their jewel experts. The purity of the jewellery is checked using a gold testing kit and is typically expressed as karats (e.g. 24 karats).
Conclusion
The gold loan per gram eligibility amount is determined by assessing the weight and purity of the jewellery being pledged. Hence, the higher the purity of the jewellery being pledged, the more funds will be approved. You can also calculate the gold loan eligibility by utilising Muthoot Finance’s online jewellery loan calculator. The lender will then assess the value of your gold ornaments and disburse the loan amount.
