How much income is enough for a gold loan

One of the most secure and stable forms of loans available in the market, Gold Loans has made a name for itself as a reliable financial resource optimizing consumer's financing capacity and thereby incorporating decision making prowess in the financial exchange transaction. Gold Loans are generally provisioned through collateral security deposits. 

To understand the functioning of a gold loan, we must first get a hold of the concept of a gold loan. In a gold loan, the borrower pledges a certain percentage of his liquid assets to the bank account based on which the valuation of the gold is calculated. The Loan to Value Ratio in the case of gold loans varies from the regulations and policies mandated by one banking institution to another but ranges in the value of 75% to 90%. 

Thus for keeping gold reserves of 1,00,000 with a bank, the borrower can get a monetary valuation of 90,000 as the loan amount. Gold Loans are thus secured forms of loans available in the market whereby the borrower can keep the gold with the bank and encase the monetary variable from the market. Now we come to the broader concept of understanding how a gold loan functions. 

The gold loan facility which is availed by the borrower can be used for meeting regular expenditures, purchasing along with term non-current assets and paying off long term non-current liabilities in the form of loans taken from financial institutions. Gold Loans also help in resolving the economic crisis for the borrower thereby improving his liquidity position in the market. Upon developing a clear concept about how the gold loans function, we would now arrive at the eligibility criteria for gold loans and how much income is enough for availing a gold loan facility-

Income Determinant

Upon critical understanding of the eligibility criteria for the gold loans, you, as a borrower of the loan will understand that for availing of the gold loans you have to submit your income proof which would include your salary statements for the last three months along with your Income Tax Returns (ITR 1) forms which would state how much salary of yours is taxable. 

The minimum salary that a borrower must have to avail a gold loan varies from the policies mandated by one private banking commercial organization to another. For example- For Small Finance Banks where the monetary amount of the loan granted as the gold loan is low, the borrower can do with a minimum salary of 10,000 per month. 

But on the other hand when we talk about large private sector banking organizations like State Bank of India (SBI) and United Bank of India (UBI), the minimum salary criteria that a borrower must possess ranges from 30,000 to 50,000 per month. 

Gold Valuation Determinant

The second determinant that is critical in understanding whether the borrowers are capable of paying off the gold loans requisitioned is known as the Gold Valuation Determinant. Through the use of Gold Loan Calculator, we can determine the valuation of Gold Loan per gram which means the amount of money that is sanctioned as loan for each gram of gold. 

Through the measure of Gold Loan per gram, we can determine the total value of the gold that will be requisitioned as the loan amount. For example- In Yes bank gold loan which is a private gold loan facility, the measure of Gold Loan per gram is extremely important as it determines the value of gold that is calculated when the asset is pledged and the loan is provided. The LTV Ratio for Yes Bank is generally 75% which means that for keeping gold valued at 1,00,000 the borrower would get a loan amount of 75,000 in cash. 

Thereby, in conclusion, we can say that gold loans play a very crucial role in the functioning of economic viability thereby bringing about economic sustenance and leading to the growth in economic prospects of the country. 

Also Read This-Andhra Bank Gold Loan made easy with Paperless Documentation