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Gold has long served as a source of immediate financial support, especially in India, due to its cultural and economic importance. However, not all gold items provide the same gold loan value per gram. Some gold jewellery commands a higher borrowing value than others.
The purity, type, and design of your gold jewellery determine the highest gold loan rate per gram. Lenders carefully evaluate these factors to offer an accurate loan amount based on the true worth of your gold.
When you apply for a gold loan, banks and financial institutions take various factors into account. They carefully examine the type of item you pledge, such as a simple gold chain, bangle, bar, or stone-studded jewellery. The value of your ornaments depends on their actual gold content.
For example, the weight and value of any diamonds, jewels, or other non-gold components in your jewellery are excluded from the calculation. The purity of your gold is a key factor in the loan process.
Lenders use specialised equipment to assess purity. Gold bars and coins, usually 24K, have the highest value, while lower-karat jewellery is valued less. Once purity is confirmed, the lender calculates the net weight and multiplies it by the current market price for that purity.
The loan amount offered is typically up to 75% of the estimated gold value, known as the loan-to-value (LTV) ratio.
The market price of gold directly influences your loan amount. The weight, purity, and current market rate of your gold are key factors determining the loan amount when applying for a gold loan. The market price sets the baseline value for the loan.
Fluctuations in the current gold rate also affect the loan-to-value (LTV) ratio, which defines the percentage of your gold’s value that you can borrow. Many lenders provide a maximum LTV of up to 75% in accordance with Reserve Bank of India (RBI) regulations.
The type and purity of the gold ornaments play a crucial role in securing the highest gold loan value per gram. Here is an overview:
22k gold ornaments attract the highest gold loan value due to their higher purity.
Gold ornaments with attached stones or decorative elements yield a lower gold loan value. Ornaments without additional stones or decorations offer higher value.
18K gold ornaments result in a lower gold loan value per gram. Diamond studs commonly use 18K gold purity, and the weight of the diamonds is deducted when calculating the total loan amount.
Gold is a high-quality and valuable metal. It serves as a wise investment during difficult times. However, gold jewellery with embedded stones reduces the overall gold value. Here are the tips for buying Gold Jewellery with embedded stones and non-gold components:
Jewellery often features stones like pearls, diamonds, or alloy jewels. These stones increase the weight of the jewellery but not its value. When selling or applying for a loan, lenders and buyers focus on the weight of the gold, not the stones.
Selling plain gold jewellery is straightforward. It offers higher loan amounts and retains quality. Gold jewellery with stones carries a lower resale value compared to plain gold.
Some jewellery uses other metals to secure stones in gold pieces. This practice reduces the gold’s clarity and purity, lowering its value. Jewellery made from pure gold guarantees lasting worth. Jewellery with embedded stones cannot compare to pure gold in value.
Customers rely on weight to determine the cost of gold jewellery. Stone-embedded jewellery combines the weight of gold and stones, leading to the risk of paying extra for the stones without receiving equivalent value in gold.
Here are some gold ornaments that attract the highest gold loan value based on design and purity level:
20K and 22K gold chains, necklaces, bangles, and rings with no stones and minimal decoration have high purity levels. These pieces carry high gold loan values per gram.
Gold bars contain 24K (99.9%) pure gold. They provide the highest valuations for a gold loan. The weight of the item determines the maximum loan amount.
Traditional Kundan ornaments are crafted from pure 24K gold, offering high gold content and purity. These pieces qualify for higher gold loan amounts.
Jewellery such as necklaces, armlets, and waistbands are typically made with 22K or 24K gold. Their high purity and substantial weight ensure excellent gold loan valuations per gram.
You need to manage your budget before taking a gold loan. It is essential to determine your loan EMI before applying. A gold loan calculator helps you estimate your EMI commitments. You can adjust the interest rate and tenure to understand the monthly repayment amount clearly. This tool helps you plan your budget effectively. It also allows you to compare loan options.
Maximising the value of your gold loan requires careful planning and informed choices. Follow these key tips to secure the best possible loan amount against your gold:
Get your gold purified before applying for a loan. Removing impurities raises the gold's quality, enabling you to secure a higher loan amount. Higher-purity gold attracts better loan-to-value (LTV) ratios.
Different banks and financial institutions offer varying interest rates. Compare the terms and conditions across several lenders to secure a higher loan amount at an effective LTV ratio. Negotiating interest rates also influences the overall loan value.
Selecting a longer loan tenure can increase your loan amount but will result in higher interest payments. Have all required documents ready before applying. These include identity proof, address proof, and proof of gold ownership.
The purity of gold determines its market value and loan amount. Higher purity gold, like 22K or 24K, fetches a higher loan. Lower purity gold, such as 18K, results in a lower loan value.
You can get a higher loan value on 22K and 24K gold ornaments. 22K and 24K gold have the best quality and value in the market. Lenders offer high loan amounts on these gold ornaments.
Yes, embedded stones or diamonds impact the loan valuation. The actual gold content is considered, and other gemstones and decorative items are excluded from the valuation.
You can usually only get gold loans against 18K, 22K, and 24K gold. However, the amount you receive depends on the weight, purity, and prevailing market value of the gold.
You can check your gold loan value using a gold loan calculator. Use the following formula to estimate the loan amount:
Loan amount = weight of gold (in grams) × gold price per gram × loan-to-value (LTV) ratio
Traditional jewellery is usually made with pure 24K gold, offering high quality and purity. In contrast, modern jewellery is often crafted with decorative elements, including stones and diamonds. These additions hold no value for loan purposes and are excluded, resulting in a lower valuation.
To get maximum loan value, you can follow these tips:
Compare different banks and financial institutions
Select the right repayment tenure
Negotiate interest rates
Prepare all the documentation beforehand
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