What Do You Mean By Appraisal Of Gold Loans?

Gold loan is one of the popular type of loan among people. Want to know about what does appraisal of gold loan means? Read Now.

1 Dec,2022 10:23 IST 27 Views
What Do You Mean By Appraisal Of Gold Loans?

Gold is a common household name in India. People consider it a pride in good times and a haven in adversity. While you can wear it as a status symbol, you can easily leverage it as collateral to obtain a gold loan.

A loan against your gold jewellery or articles is known as a gold loan. It is a secured loan where the gold acts as collateral in return for the required money. The interest rate is lower for this type of loan. It is also known as a multi-purpose loan as it does not impose any restrictions on usage.

You can get a gold loan from a traditional bank or an NBFC within a few hours. The weight and value of the gold you keep as collateral determines the loan amount.

What Do You Mean By Gold Loan Appraisal?

The gold loan process is simple, with quick disbursements. After submitting your gold loan application, lenders check the purity of the collateralised gold. The gold loan amount depends on this collateralised gold.

According to the RBI guidelines, the gold loan amount should be at most 90% of the pledged gold, known as the loan-to-value ratio. Additionally, the gold purity of the pledged asset should be between 18 to 24 carats. Here, appraisers perform the purity check on the gold you want to put down.

For example, a borrower wants to pledge 10 gm of 20-carat gold as collateral for a gold loan. The market value of the gold at this time is Rs. 53,000. Now, the lender will independently verify the purity of this piece of gold. Assuming the purity turns out to be 20-carat, with an LTV of 90%, the borrower would receive a maximum loan amount of Rs. 47,700 (53,000 x 90%).

What Are The Factors Affecting The Gold Loan Valuation?

A few determining factors for the gold loan valuation include the following.

• The prevailing market rates
• The acceptable purity for a gold loan ranges between 18-24 carats
• In the case of pledging jewellery, the gold loan amount depends on the gold element and does not include any stone or diamonds attached to it

Frequently Asked Questions

Q.1: What is a gold appraiser in gold loans?
Ans: A gold appraiser is generally a professional who verifies the gold purity before approving a gold loan.

Q.2: What is the loan-to-value ratio?
Ans: A loan-to-value ratio or LTV determines the eligible loan amount with the appraised value of your gold collateral. The maximum LTV for a gold loan is 90%, set by the Reserve Bank of India.

Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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