Gold Loan

Jewel Loan

Gold has evolved from being a precious metal for beautiful jewelry to becoming an extremely popular investment instrument in India. Moreover, when you need cash urgently for business needs, unplanned expenses or medical emergency you can take out a Gold Loan and fulfill your needs on your own. So, how does a Gold Loan work? Let’s find out

Gold Loan – How it Works

Secured loans

For a Gold Loan, the bank takes your gold as collateral for the period of the loan. Banks charge an interest rate, and once you repay the entire loan, the bank returns your jewelry.

Type of gold accepted

Another essential thing you need to know about how Gold Loan works is the type of gold accepted. Most banks accept only gold jewelry. Also, the purity of gold provided as collateral should be between 18K and 22K.

Maximum Loan to Value ratio provided by banks

Typically, most banks provide Gold Loans for a maximum loan to value ratio of 75% of the current market price of the gold. So, if you end up mortgaging gold worth ₹ 100,000; the maximum loan amount you can get is ₹ 75,000.

Gold evaluation and loan sanction process

While speaking about how Gold Loan works, we must mention the evaluation and sanctioning process. The bank evaluates the gold provided as collateral, after which it determines the maximum loan amount you can get, and the interest rate levied on it. As the borrower, you can select the loan repayment tenure, which should be between 6 and 24 months. With HDFC Bank, you can get a Gold Loan in less than an hour.

The business collaboration has been done for Jewel Loan with ICICI