Purpose of a Gold Loan

Gold loans are extremely fruitful to a lot of people. A lot of people use the opportunity gaining of easy and accessible loans to gain benefits. Usually it is considered that people take up loans because they are facing some financial difficulty or some existing debts and while these are true, they are not the only truths. A lot of people take advantage of the idle gold sitting in their lockers and the low gold loan interest rates to seek and take up new opportunities. 

Recently, it has been announced that the Reserve Bank of India has finally decided to increase the loan-to-value (LTV) ratio on gold loans. The LTV ratio states the value of how much you can borrow against the asset’s (in this case, gold) value which used to be 75% for gold but now, the central bank has increased the LTV ratio on gold loan to 90% until April 1, 2021.

This is done keeping in mind the financial situation of the people in the country during the pandemic situation. Now, a lot of people will use this opportunity to get money and pay off their debts and cover their overhead or even their basic expenses (in worse scenarios) which is the main reason why this decision was taken in the first place but there will be some people who will use it to their advantage. 

Entrepreneurial people will find an advantage in this. They can take up a loan and get a cheaper loan to start or fund a business or get started with a startup to earn more money. This is how loans help people to grow and indirectly, help the economy of the country to get better. People are looking for opportunities to grow these days and loans, especially the ones secured by collateral with low interest rates and easy application, help people create new ideas and businesses and aid the economy.

Manappuram gold loan is one such financial establishment which is rated as one of the top gold loan lenders in the market. A good time to take up a gold loan is when the gold prices are high as then the loan value will be better compared to other times. These days, the gold rates are increasing and have long surpassed the ₹50,000 mark. Therefore, if anyone would be thinking of taking out a gold loan, the current times would prove to be ideal circumstances for all involved in the transaction.

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