As the value of gold continues to rise, many Indians are realising the untapped potential of their idle jewellery at home. Gold jewellery, being a reliable and secure asset, can be easily converted into instant funds during financial emergencies. This has led to the popularity of gold loans as a convenient solution to meet urgent financial needs.
Gold loans operate on a simple principle: you pledge your gold jewellery as collateral and borrow money against it. Once you repay the loan, you back your gold jewellery back. These loans offer lower interest rates compared to other types of loans, and the loan amount is determined by the current rate of gold in the market.
Hence, fluctuations in the gold price can have a significant impact on gold loans. For instance, when the price of gold increases, the value of the gold used as collateral also increases. This means that you can get a larger loan amount or better gold loan interest rate.
Understanding the impact of gold rates on gold loan
The value of gold loans is closely linked to the market price of gold. When you apply for a gold loan, the loan amount depends on factors such as the weight, purity of your gold, and the current market rate. Fluctuations in the market price directly impact the baseline value of the gold loan. Additionally, changes in the gold rate affect the loan-to-value (LTV) ratio, which determines the percentage of your gold's value that can be borrowed. Most lenders, in accordance with RBI regulations, offer a maximum LTV of up to 75% for gold loans.
For example, if you pledge gold with a current value of Rs. 1 lakh, the maximum loan amount you can receive is Rs. 75,000. However, if the price of gold increases by 5%, the value of your gold will be Rs. 1.05 lakh. In this scenario, the 75% LTV ratio would be Rs. 78,750, allowing you to borrow a larger amount if the value of your gold appreciates.
Bajaj Finance provides gold loans with competitive interest rates, easy eligibility criteria, and minimal paperwork. The loan amount can be disbursed within a few hours, ensuring quick access to funds. The eligibility for a gold loan is straightforward. Anyone with gold jewellery of 18-22 karat purity can apply for the loan, and the documentation required is minimal, such as providing one of your KYC documents like Aadhaar Card, voter ID card, passport, or driving licence.
How to apply for a quick gold loan
You can follow these simple steps to apply for a Bajaj Finserv Gold Loan:
Step 1: Click on the ‘APPLY’ button to open the online application form.
Step 2: Enter your name and mobile number.
Step 3: Type the name of your city and select the branch closest to you.
Step 4: Submit the OTP sent to your phone and complete the online process.
A representative from Bajaj Finance will assist you with an appointment at your preferred gold loan branch. Visit the branch at your convenience and have your 18-22 karat gold jewellery evaluated and your application processed.
Your gold jewellery will be safely stored in our highly secure vault and returned to you once you successfully repay your loan. Additionally, we provide free insurance coverage for your gold while it remains in our custody.
Apply for a loan against your gold jewellery today and meet your financial requirements with ease.
