What Factors Should I Consider to Maximise Gold Loan Amount Per Gram?

When you use your gold as collateral for a loan, the amount you receive depends on several major factors. If you know how lenders determine the Gold Loan per gram, you will get an ideal value for your gold. Accordingly, you can stay informed and maximise the value received from your gold. Read further to understand the major factors to consider when determining your Gold Loan amount per gram.

1. Purity of Gold

Although 24 carat gold is the purest, several gold jewellery are made with 18 to 22 carat gold. So, lenders may allow you to pledge gold jewellery from 18 to 22 carats of gold purity. Before pledging your gold item, check its purity with a certified jeweller or refer to its hallmark.

2. Current Gold Market Price

Gold prices can fluctuate regularly, which directly affects the Gold Loan per gram. For instance, if the gold price increases, the loan amount you may borrow may also increase. Lenders use the last 30 days’ average gold price to calculate the updated amount.

To ensure getting the maximum Gold Loan amount, it is always helpful to apply for your loan when the market price is high. Track price movement over a few days and see real differences in the potential loan amount.

3. Loan-to-Value (LTV) Ratio

The Reserve Bank of India sets a limit on the amount you can borrow against the value of your gold. This is known as the Loan-to-Value (LTV) ratio. The current regulations allow lenders to lend up to 75 to 85% of the market value of your gold, as per the eligibility.

For example, if your gold is worth Rs 1,00,000, you can get a maximum loan of Rs 85,000. Some lenders may issue a slightly lower LTV depending on their internal policies or your pledged gold quality. A lender with a higher LTV will provide the maximum Gold Loan per gram. You should always compare lenders to see which one offers you favourable terms.

4. Type of Gold Accepted

Lenders may not lend against all gold items. While many lenders accept gold jewellery, some may not accept gold coins or gold bars above a certain weight. The type of gold pledged may impact the Gold Loan per gram. Ornaments with complex designs or those embellished with stones may attract a lower loan amount. That is because they consider only the weight of pure gold when considering the value.

If you want to get the maximum Gold Loan for each gram of gold, it’s better to use gold ornaments with little to no decoration. Lenders prefer these kinds of pieces because they are easy to value and store.

5. Lender’s Valuation

Each lender has its own valuation process. Some may have expert appraisers who value your gold, while others may use third-party companies to determine your gold’s value. In any case, it is suitable to work with a reputable lender who uses a standard evaluation method. They should explain to you how they determined the gold value and the loan amount.

6. Relationship with the Lender

Your current relationship with a lender can impact the amount offered. For instance, customers with a strong repayment history or those who have dealt with the financial institution previously may gain a preference from the lender. With a strong repayment history, they can qualify for a bigger loan amount or a lower Gold Loan interest rate. A solid customer relationship boosts a lender’s confidence, leading to faster loan decisions, better repayment terms, and lower interest rates.

7. Weight of Gold

The weight of your gold is also an important factor in establishing your Gold Loan per gram. Heavier jewellery may yield a larger loan amount, but the lender may consider the net gold content of the ornament after excluding impurities or stones. They multiply the total weight by the per-gram value to determine the final loan amount.

To ensure a more accurate valuation, keep your jewellery pieces separate and do not mix different carat purities.

8. Repayment Capacity and Loan Tenure

While the value of gold determines your Gold Loan per gram, lenders may also consider your repayment capacity to determine your final sanction amount. Select an appropriate tenure and repayment schedule to maintain financial discipline and project yourself as more credible to the lender.

Shorter tenures may have lower interest rates, while longer tenures have easier monthly interest payments. You should choose a repayment plan that suits your financial situation. Paying your loan in full and on time helps you qualify for a higher amount and a better jewel loan interest rate.

9. Fees and Charges Transparency

While it’s important to check the Gold Loan per gram, examining the applicable fees and charges is also crucial. It includes charges associated with the loan, such as processing fees, evaluation fees, prepayment charges, and late payment fees. Ignoring these additional costs before borrowing may diminish the value of your overall loan.

Select a lender that clearly outlines all fees and charges. Fee transparency helps you to know precisely the cash amount you will receive and the repayment amount over the tenure.

Conclusion

Your Gold Loan per gram depends on a combination of factors, including your gold purity, prevailing gold market rates, lender policies, and your financial condition. Pledging high-purity hallmarked gold, keeping track of gold prices, and negotiating for a suitable Gold Loan interest rate help gain the highest value for your gold.

If you are looking for a trustworthy and transparent lender, RBI-compliant lenders provide attractive rates, transparent charges and quick approval. With flexible repayment schemes, you can get complete value out of your assets without hassle.