How can I get a Loan against Diamond Jewellery?
Thinking of availing gold loan with the help of diamond jewellery? Read this article to know if you can avail gold loans with other jewellery!
Diamonds, they say, are forever! World over, diamond and platinum jewellry 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 jewellry. 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 jewellry?
So, is there something called a diamond jewellry loan? Can we get loans on diamond jewellry? Is there a loan agent that will give a loan on diamond jewellry? This blog gives you the answers you are looking for.
Loans against Diamond and Gold Jewellry:
You can get a loan against your gold jewellry 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 jewellry only. The value of the precious or semi-precious stones embedded in the jewellry 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 jewellry loan is essentially a loan against the gold in the jewellry.
How is the value of the loan on Diamond Jewellry determined?
Your loan amount will depend on factors
-The weight of gold present in the jewellry
-The purity of the gold
-The Loan to Value ratio offered by the loan provider
-The prevailing price of gold
As you may be aware, the cost of any jewellry 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 90%, 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 jewellry 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 jewellry is determined by the value of gold present in the jewellry. The value of the diamonds is not considered.
Eligibility Criteria for a Diamond Jewellry Loan:
As mentioned above, the most basic of the criteria to avail a loan on diamond jewellry is that the jewellry 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 Jewellry 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.
While it is not possible to get a loan with diamonds deposited as a collateral, you can get a loan on diamond jewellry if the diamonds are embedded in gold or if gold is also an intrinsic part of the jewellry piece. There are no conditionalities attached to the usage of the loan.
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.
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