What is the process of pledging your gold in order to secure a high loan value?

A Gold Loan enables the borrower to pledge their gold as collateral to receive cash. A Loan against Gold can be availed for any purpose such as marriage, education, medical treatment or business expansion. Gold Loan interest rates are lower than other types of loans and the time to process the loan is also faster. This blog post will guide you on how to pledge your gold and get a high loan value! Let's get started.

What is a Gold Loan?

A Loan against Gold entails pledging gold items such as gold jewellery or coins as collateral in lieu of a loan. The loan value is decided basis the current market value of gold. Typically used for short-term financing such as emergency expenses or unexpected bills, the loan can be repaid within 6-12 months at interest rates starting from 10% p.a.

At ICICI Bank, you can avail a loan ranging from Rs 50,000 to Rs 1 crore against your gold jewellery.

How does one calculate the maximum Gold Loan value?

The pledged gold's purity and weight determines the Gold Loan value. The Loan-To-Value ratio (LTV) determines the maximum loan amount that a bank can offer against the gold items. The LTV for a Loan against Gold is anywhere between 60% to 75%. To know the Gold Loan value that you can avail from ICICI Bank, you can use the Gold Loan Calculator. 

Factors for determining the Gold Loan value:

1. Loan-to-Value ratio

The LTV ratio is one of the key factors that lenders consider when seeking a loan against their gold items.

2. Purity of gold

The purity of gold is another important factor that lenders consider while determining the loan value. The higher the purity, the more valuable the gold and the higher loan value you can expect. At ICICI Bank, you can avail a loan against security of 24-carat gold jewellery with 99.99% purity. 

3. Weight of Gold

As per the Reserve Bank of India, the weight of gold coin(s) cannot exceed 50 grams per customer. The loan amount that you can avail from a pledged Gold Loan is based on the weight of your gold. The more gold you have to pledge, the higher loan value you can secure. However, it is important to remember that the loan value also depends on other factors such as purity and the current market value of gold.

4. Form of Gold

You can pledge either gold coins or gold jewellery for a loan. You may get a higher loan value for pledging jewellery because it is assessed not only by weight but also by the quality of the craftsmanship.

Bottom line:

One of the most innovative ways to secure high loan value is by pledging your gold. This gives an impression that as a borrower you are a viable candidate as you are willing to pledge your gold as collateral.

This gives them much more confidence in lending you money and results in a higher loan value.

T&C apply.