The amount of the gold loan is based on the gold purity and carats used for the collateral. It also depends on the price of gold at the time of the gold loan and the lender policies. The ratio of LTV (Loan to Value) is different from lender to lender. LTV or Loan to Value is the loan amount given to the borrower by the lender based on the asset value. The price of gold varies daily. The table below shows the amount for loan against gold, assuming the average gold price of INR 49,712 for the last 30 days and the ratio of LTV (Loan to Value) is 75%:
Benefits of Gold Loan:
1. Lower Interest Rate:
A loan against gold comes at a low-interest rate compared to a personal loan and other unsecured loans, which is its best advantage. The Shriram Finance Gold Loan interest rates start from 11.5%. It is one of the lowest interest rates on gold loans. The interest rates can go above 30% on personal loans.
2. Minimal Processing Fee:
Shriram Finance charges a processing fee of 0.1% for high carat gold which is almost negligible. The processing fees on gold loans are much lower as compared to personal loans. Personal loans charge a minimum of 2.5% processing fee.
3. No credit history:
Gold loans don't require any credit history. It is one of the best advantages of gold loans, unlike unsecured loans. Unsecured loans are only given to individuals who have a good credit history. In the case of a gold loan, the loan is given to the pledged gold as security collateral.
4. Easy Documentation:
Loan against gold involves an easy documentation system. The documentation is minimal. You can get the gold loan with identity proof, photographs, and address proof. In the case of personal loans or other loans, the formalities take a lot of time and require heavy documentation, guarantees, income statements, and the credit history of the individual.
5. Insurance Cover:
Another unique benefit of the gold loan is insurance cover. If a borrower meets with an accident or untimely death, the outstanding amount will be paid by the bank or institute itself. Family members are not required to pay the outstanding amount. The gold will be handed over to the family in such cases.
6. High Valuation:
Gold loans provide a high valuation of the loan against gold articles. The LTV determines the amount of loan given to the borrower. Shriram Finance allows 75% LTV loan against jewellery or other gold articles. It is one of the highest LTV (Loan to Value) Ratios in the market compared to other companies.
7. Pay Interest Only’ Option:
One of the most significant advantages of taking a gold loan is that you are only required to pay the interest loan every month. There are various other options for repayment of a gold loan. However, the majority of people opt 'interest only' option. It allows people to pay only interest rate every month and principal amount later while closing all the formalities at the end.
Thus, to conclude, we can say that you can explore the funding with the Shriram Finance Gold Loan Schemes. The gold loan procedure is quite simple compared to the unsecured loan procedure. As long as you meet the eligibility criteria, you can take the loan against the pledged gold ornaments or jewellery. For more information on the gold loan schemes, you can click here.