In recent years, gold loans have witnessed a lot of popularity as they offer individuals a convenient and quick way to access funds by pledging their gold assets as collateral. In the current times of financial innovation, understanding the valuation process behind a gold loan app is quite essential for both potential borrowers as well as investors.
Today, we’ll delve deeper into the overall process of gold valuation, understanding it in order to make informed financial decisions. Long gone are the days when people had to travel to avail of such loans as now your smartphone is enough!
What is a gold loan?
Also known as a loan against gold, a gold loan is basically a secured loan taken by the borrower from a lender by keeping their valuable gold articles (within 18-24 carats) as collateral.
The amount of loan offered is a certain percentage of the gold, typically up to 80%, as per the market standard, based on the quality as well as the current market value of the gold.
Keep in mind that you can always receive your gold items back after paying them back in monthly installments. As per the Reserve Bank of India, the loan amount allowed may not exceed 90% of the current market value.
What are the advantages of availing it?
- No income proof is required
Generally, financial institutions do not ask for any kind of income/salary proof from the applicants as the loan is secured against the valuable gold. Therefore, anyone can apply for this loan as it doesn’t matter if you are a salaried or a self-employed individual.
- Lower Rate of Interest
Being a secured loan, gold loans are generally subject to lower gold loan interest rate as compared to other financing options. These include personal loans, home loans, or other secured loans.
- Gold safety
The financial institution offers triple-layered security for gold ornaments you submit as collateral which keeps them totally safe. Remember that your valuable stuff will be kept secured in their vault throughout the tenure. You’ll be able to access back your gold when you repay the loan amount in full.
- No requirement for a credit score
Unlike most of the loans where credit score is considered, a gold loan does not depend on it. In this case, the amount of the loan is totally based on the market value of your ornaments. But keep in mind that you can build a good credit score by taking such a loan.
Understanding Gold Valuation in Gold loan App
- Purity
The purity of your gold jewelry is crucial in determining the amount you can receive.
- Weight
The weight of your gold jewelry is essential in assessing its value for a gold loan. It is measured in grams using advanced karat meters in order to ensure accuracy.
- Current Market Price
This factor has a significant impact on the evaluation of gold for a gold loan. The rate of gold varies on a day-to-day basis due to various factors such as supply and demand, geopolitical events, economic conditions, and more.
- LTV Ratio
The Loan-to-value ratio plays a crucial role in evaluating the gold value for a loan. It signifies the percentage of the amount of the loan that can totally be approved based on the value of the gold.
How to avail of a gold loan?
Availing this type of loan is super easy nowadays. You don’t need to go anywhere; with just a few taps, you can easily avail it. I used the Bajaj Finserv application for this facility, and believe me, it is highly recommended. Here is a step-by-step guide:
- Download the Bajaj Finserv app on your smartphone. It is available both for iOS as well as Android.
- Sign up with your mobile number
- Under the ‘Products for you’ section, tap on Gold Loans
- Proceed further as per your requirement
Furthermore, it also has a gold loan calculator which can help you in better financial planning.