Loans Against Bullion and Krugerrands
How much can I borrow against my bullion?
The short answer
The amount you can borrow against bullion depends on how the lender values the metal, the proportion of that value it lends, its minimum and maximum loan limits and the outcome of the credit and affordability assessments required by law. Because bullion is valued against the gold or silver price, the same coins or bars can support different amounts at different times. The loan-to-value Knox applies depends on the item: up to 75% of the assessed value for gold, 60% for silver and 50% for watches and handbags.
The valuation basis
Lenders value bullion using a stated basis, such as the current spot price converted to rand, the provider's own buy-back price or another reference price. The spot price is the benchmark price for the metal, while a buy-back price is what a dealer would pay you, which is usually lower. Ask which basis applies, because it can make a meaningful difference to the loan amount. Knox's buy-back prices are based on the live international spot price, converted to rand. Krugerrands are bought at Knox's morning (AM) or afternoon (PM) price, and the final offer is confirmed after the coins or items have been inspected and tested.
The advance rate
The advance rate is the proportion of the assessed value a lender is prepared to lend. Lenders keep it below full value to allow for price falls, selling costs and the time needed to sell if a loan is not repaid. A lower advance rate means a smaller loan but more room before a price fall affects the security.
Limits and the credit assessment
Lenders also set minimum and maximum loan amounts. Knox has no minimum loan amount. There is no maximum loan amount either: what you can borrow is limited only by the value of the item and the outcome of the credit assessment. The National Credit Act requires credit providers to carry out the assessments it prescribes for the type of agreement, and the result can reduce the amount offered or lead to a declined application, whatever the value of the bullion.
What depends on your bullion and what to do next
The type, quantity and condition of the coins or bars affect the value, and Krugerrands and bars from recognised refiners are generally easier to value than less common products. It can help to work out how much you need before you request an assessment, since a smaller loan generally costs less in total. The pre-agreement quotation shows the proposed amount, interest, fees, term and total cost of credit before you sign. Bring your ID, proof of address (dated within the last 3 months), the bank details for the account the loan should be paid into and for the debit order, and any certificates, invoices or papers for the item. If you are married in community of property, your spouse must consent to the loan.
How Knox handles this
Ready for the next step?
Speak to the Knox team about your situation. They will confirm current pricing, availability and requirements before you decide.
