Get Cash against the gold loan.

2 Mins read

Borrowers can now unlock more value against their idle jewellery as the Reserve Bank of India has increased the Loan to Value Ratio from 75% to 90% till March 31st, 2020. Individuals can thus get more loan against gold with the same value of gold. In its announcement, RBI said that to mitigate the economic effects of the pandemic, the loan against gold jewellery and ornaments for non-agricultural gold loans have subsequently been increased.

Significance of gold loan in the times of COVID 19:

With the economy facing an unprecedented negative growth of GDP, the country’s socio-economic conditions have also been affected severely. Thus, these conditions in the pandemic have posed some severe challenges in managing the day to day operations, including ensuring smooth flow of Cash for the business continuity, health and family care etc. for the people.

In such circumstances, a gold loan can help the borrower to avail the credit at lower costs without any difficulty and thus deal with the challenge of liquidity bravely.

Here are some reasons why you should opt for a gold loan

 A gold loan availed the mortgage of your jewellery is one of the ideal options in these times because of the following reasons:

  1. No requirements for CIBIL Score: One of the most significant advantages of gold loan is that it does not require any credit score or CIBIL. Thus, if you do not have any source of income or have recently lost your job because of COVID pandemic, you can easily avail finance to set up your business or to manage your day to day operations. 
  2. Lower Interest Rates: Various banks and non-banking financial institutions have also launched business verticals to provide hassle-free credit to the borrowers at a lower rate of interest. For instance, Canara Bank provided gold loans at 7.85% for specific tenure to help borrowers to meet their cash needs.
  3. Higher LTV: A gold loan can now be availed upto 90% of the gold as against the maximum LTV of 75%. Thus, the borrowers can now get more cash against their idle gold.
  4. Hassle-Free Credit: To tap the unexplored gold markets, various financial institutions are providing gold loans at the doorstep of the borrowers. The entire process of availing gold loans have now become digital, thus providing the convenience of paperless loans to the borrowers. For instance, Muthoot Finance recently launched ‘At-Home Gold Loan Service’ for the borrowers. 

Know about Gold Loan: Features, Gold Loan Interest Rates

Gold loan, a secured loan, availed against the mortgage of gold jewellery and ornaments is also known as a loan against gold.

  • There are no restrictions on end-use of gold loans, and thus you can avail a gold loan for business and personal needs including starting your business, marriage or home loan renovation etc.
  • Presently, the gold loan starts at 9.90%. HDFC Bank, Yes Bank, ICICI Bank, Andhra Bank, IndusInd Bank give the lowest gold loan interest rates in the range of 9.90% to 11.5%.
  • A gold loan can be availed for a tenure upto 36 months.
  • There are flexible modes for gold loan repayment including bullet repayment, EMI and overdraft schemes.

Conclusion: There is considerable potential of the gold loan in the present scenario given that banks are hesitant to provide other loan products such as a personal loan, loan against property. Also, with the launching of various gold loan schemes to provide hassle-free credit to the borrowers, a gold loan can be the most preferred option to deal with a cash crunch in the lockdown period.