How can I get a Loan against Diamond Jewellery?

Diamonds, they say, are forever! World over, diamond and platinum jewellery is far more popular than the precious metal loved by all Indians – gold. But even in India, there are an increasing number of fashion-conscious people who have begun adding diamonds to their collection of jewellery. In these uncertain times, when one makes an investment in items like gold and diamonds, the question at the back of their mind, more often than not is “How liquid will this investment be?” In other words, how easy is it to get a loan on diamond jewellery?

So, is there something called a diamond jewellery loan? Can we get loans on diamond jewellery? Is there a loan agent that will give a loan on diamond jewellery? This blog gives you the answers you are looking for.

Do you have diamond and gold jewellery lying idle in your locker? Do you need some quick cash for an urgent need or an opportunity? If yes, then you can use your jewellery as collateral and get a loan against it. This is a convenient and hassle-free way of getting funds without selling your precious ornaments.

What is a Gold Loan and How does it Work?

A gold loan is a type of secured loan where you pledge your gold ornaments as security and get a loan amount based on the value of your gold. The gold loan interest rate is usually lower than other types of loans, as the lender has the assurance of your gold as collateral. The gold loan tenure is typically short-term, ranging from a few days to a few years. You can repay the gold loan amount in easy instalments or as a lump sum at the end of the tenure. You can also prepay the gold loan amount without any penalty. Once you repay the gold loan amount and the interest, you get back your gold ornaments in the same condition as you pledged them.

Can You Get a Loan Against Diamond Jewellery along with Gold Jewellery?

Yes, you can get a loan against diamond jewellery, or jewellery with any precious stone along with gold jewellery, provided that the jewellery has gold as its base metal. The lender will evaluate the purity and weight of the gold in your diamond jewellery and offer you a loan amount accordingly. However, the lender will not consider the value of the diamonds or other precious stones in your jewellery, as they are difficult to assess and liquidate. Therefore, the loan amount that you can get against diamond jewellery will be lower than the loan amount that you can get against pure gold jewellery.

Loans against Diamond and Gold Jewellery:

You can get a loan against your gold jewellery that has diamonds in it or any other precious or semi-precious stones. However, the loan value is calculated on the value of gold present in the jewellery only. The value of the precious or semi-precious stones embedded in the jewellery are not taken into account. Essentially therefore, you do not get a loan against your diamonds. You can get a loan against the gold holding the diamonds together through the gold loan offered by various loan service providers like IIFL Finance and others. A diamond jewellery loan is essentially a loan against the gold in the jewellery.

How is the value of the loan on Diamond Jewellery determined?

The value of the loan on diamond and gold jewellery is determined by the following factors:

• The purity of the gold: The lender will check the purity of the gold in your jewellery using a carat meter or an acid test. The purity of the gold is measured in carats, where 24 carats is the purest form of gold. The higher the purity of the gold, the higher the value of the loan.
• The weight of the gold: The gold in your jewellery will be calibrated using a weighing scale. The weight of the gold is measured in grams. The higher the weight of the gold, the higher the value of the loan.
• The gold loan per gram: The lender will multiply the purity and weight of the gold in your jewellery by the gold loan per gram rate. The gold loan per gram rate is the amount of money that the lender is willing to lend you for every gram of gold in your jewellery, considering your minimum gold loan limit. Loan on gold per gram rate depends on the prevailing market price of gold, the lender’s margin, and the gold loan to value (LTV) ratio. The gold loan per gram rate may vary from lender to lender and from time to time.
• The gold loan to value (LTV) ratio: The gold loan to value (LTV) ratio is the percentage of the value of the gold in your jewellery that the lender is willing to lend you. The gold LTV ratio is regulated by the RBI and is currently capped at 75%. This means that the lender can lend you up to 75% of the value of the gold in your jewellery. The gold loan LTV ratio ensures that the lender has a sufficient margin of safety in case of a fall in the gold price or a default by the borrower.

As you may be aware, the cost of any jewellery item depends on the value of the precious metals and stones in it as well as the making charge. However, while calculating the base value on which the gold loan is to be given, the value of the gold present is the only factor taken into consideration. If the cost includes 20 g of gold plus the cost of diamonds, plus making charges – the loan assessment officer will only consider the 20 g of gold. He will also take into consideration the purity. Most gold loan providers only accept gold which is of 18K purity or more. The higher the purity, the greater is the loan value offered.

The Loan to value ratio is the ratio of the loan given to the ratio of the value of gold deposited for the gold loan. While RBI has fixed a ratio of up to 75%, most loan providers offer a Loan to value ratio of 75%. The prevailing price of gold is taken into consideration while calculating the loan. Some loan providers take the average price of the past week or past month to determine the value of the loan. Thus, even if you purchased the jewellery when gold prices were very low, perhaps half the cost of what it is presently, the current price of gold will be taken into consideration to calculate the loan amount you are eligible for

The bottom-line however is that the value of the loan against diamond jewellery is determined by the value of gold present in the jewellery. The value of the diamonds is not considered.  Learn how to start a jewelry business. 

How is the Gold Loan Amount Calculated?

The gold loan amount is calculated by multiplying the gold loan per gram rate by the weight of the gold in your jewellery and then multiplying it by the gold loan LTV ratio. For example, suppose you have 50 grams of 22-carat gold jewellery and the gold loan per gram rate is Rs. 3,000 and the gold loan LTV ratio is 75%. Then, the gold loan amount that you can get is:

Gold loan amount = Gold loan per gram rate x Weight of gold x Gold loan LTV ratio = Rs. 3,000 x 50 x 75% = Rs. 1,12,500

But you don’t need to sit with a calculator to run these numbers, you can simply use IIFL’s gold loan calculator, where you will get accurate numbers for loan against gold using gold rate today.

Eligibility Criteria for a Diamond Jewellery Loan:

As mentioned above, the most basic of the criteria to avail a loan on diamond jewellery is that the jewellery should contain gold as the value of gold will determine the loan amount. This gold should be of purity of 18 carats and above. Additionally, you need to be an Indian citizen, between 18 and 70 years of age and should have an income source with which to repay the loan.

What can I use the Loan on Diamond Jewellery for?

You can use the loan received against the gold or the gold loan for almost any purpose. There are no conditionalities attached. People take gold loans for education, medical emergencies, to top-up a home loan and to even go on a vacation.

How to Apply for a Gold Loan at IIFL Finance?

If you want to get a loan against diamond and gold jewellery, you can apply for a gold loan at IIFL Finance. IIFL Finance is one of the leading NBFCs in India that offers gold loans at attractive interest rates, flexible repayment options, and minimal documentation. You can apply for a gold loan at IIFL Finance in the following steps:

• Visit the nearest IIFL Finance branch or apply online: You can visit the nearest IIFL Finance branch with your gold jewellery and identity proof, or you can apply online through the IIFL Finance website or app.
• Get your gold jewellery valued and verified: The IIFL Finance executive will check the purity and weight of your gold jewellery and offer you a gold loan amount based on the gold loan per gram rate and the gold loan LTV ratio.
• Submit the required documents: You need to submit the following documents to get a gold loan at IIFL Finance:
• Identity proof: Aadhaar card, PAN card, passport, driving license, voter ID card, etc.
• Address proof: Aadhaar card, passport, driving license, voter ID card, utility bill, rent agreement, etc.
• Signature proof: PAN card, passport, driving license, etc.
• Sign the gold loan agreement and get the loan amount: You need to sign the gold loan agreement and hand over your gold jewellery to the IIFL Finance executive. The executive will keep your gold jewellery in a safe and secure vault. You will get the gold loan amount instantly in your bank account or by cheque or cash.

Conclusion:

While it is not possible to get a loan with diamonds deposited as a collateral, you can get a loan on diamond jewellery if the diamonds are embedded in gold or if gold is also an intrinsic part of the jewellery piece. There are no conditionalities attached to the usage of the loan.

Getting a loan against diamond and gold jewellery is a smart way of using your idle assets to meet your financial needs. You can get a gold loan at IIFL Finance with ease and convenience, and enjoy the benefits of low interest rates, high loan amount, and quick disbursal. You can also repay the gold loan as per your convenience and get back your gold jewellery in the same condition. So, what are you waiting for? Apply for a gold loan at IIFL Finance today and fulfil your dreams.

Frequently Asked Questions

Q.1: How is collateral evaluated for a gold loan?
Ans: The collateral for a gold loan must be between the purity mentioned by financial institutions. The loan valuation excludes any precious stones or diamonds attached to your pledged jewellery.

Q.2: What is the LTV ratio for a gold loan?
Ans: The Reserve Bank of India has set the maximum LTV cap for gold loans in India which varies from time to time.

Ans. Yes, you can get a gold loan on diamond jewellery, as long as the jewellery has gold as its base metal. However, the value of the diamonds or other precious stones will not be considered for the loan amount, only the value of the gold.

Ans. Generally, gold coins, bars, bullions, and other forms of pure gold cannot be accepted for gold loan, as they are not considered as jewellery. Also, jewellery that has less than 18 carats of gold purity or has other metals or alloys mixed with gold may not be accepted for gold loan.

Ans. The answer to this question may depend on your personal preference, budget, and purpose. Diamond jewellery is a symbol of luxury, beauty, and status, and can also be a good investment option, as diamonds are rare, durable, and have a high resale value. However, diamond jewellery is also very expensive, and may not suit everyone’s taste, style, or occasion. Therefore, you should buy diamond jewellery only if you can afford it, appreciate it, and use it.