Gold Loan: In these times of coronavirus pandemic, your gold can serve you well. After the Reserve Bank of India’s (RBI) recent decision to increase the loan-to-value (LTV) ratio, you are entitled to a higher loan amount for the same value of gold. This relaxation has been extended for a limited period of time.  

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Investment in gold is one of the top priorities of an average household in India and people like to remain invested in this precious metal for long durations. According to estimates of World Gold Council (WGC), Indian households cumulatively hold around 22-25 tn gold. A lion share of this is with the rural households. 

How to make use of your gold 

You can apply for gold loan during urgent needs or unforeseen events like a job loss or business loss. Get your gold converted in small ornaments and avail short term loans on them. The prices of gold have also shot up significantly over the last several months. 

  • RBI has increased the LTV on non-agricultural loans from an earlier limit of 75 per cent to 90 per cent now. This facility will be available till 31 March 2021.  
  • This will also help banks and NBFCs to increase their gold loan books. 
  • Many NBFC have now chipped in as the demand for gold loans have seen a spike.  

How to get gold loan? 

Bank and NBFC are giving gold loans. The interest rates in banks is comparatively less in comparison to NBFCs. The documents related to your gold valuation will be necessary to get loans. The applicant will be required to deposit the gold with the bank and NBFCs. Since this type of loan belongs to the category of secured loans, your credit score may not have an adverse impact on your chances to get the loan.  

Pros and cons of gold loan: 

  • You can get gold loans easily and quickly. 
  • Less documentation requirements 
  • These are short term loans so you get your loan after you repay the loan.  
  • Purity could be compromised if the loan is taken from unauthorised sources.

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  • Interest rate may not be similar at all places