Here’s Everything You Need to Know about Gold Loan Per Gram Rate

In Indian culture, gold holds huge significance and symbolises wealth and prosperity. Other than being considered auspicious, this precious metal is also one of the most popular investment avenues. An average Indian household keeps a major part of its savings in the form of gold ornaments, be it jewellery, coins, bars, or something else. The main reasons behind this are the lucrative ROI and easy liquidity that gold offers.

Table of Content

What is Gold Loan Per Gram Rate?
Impact of Per Gram Rate on Gold Loan Amount
How to Maximize the Value of Your Gold Loan

This is a well-known fact that financial emergencies can come into everyone's life. Gold ornaments also serve as a reserve for those difficult situations. An individual can use his/her gold ornaments not only to create wealth over a period of time but also to get over a temporary cash crunch. Selling gold is not the only available option, as one can leverage gold ornaments to avail a loan as well.

The concept of borrowing money against gold ornaments is centuries old. Nothing much has changed over all these years. The only major difference is that things are more streamlined now, and traditional moneylenders have been replaced by government-authorised financial entities. Currently, there are a number of banks and NBFCs that offer quick and hassle-free gold loans. One can apply for a loan to quickly arrange the required sum of money and get over a financial crisis.

What is Gold Loan Per Gram Rate?

Also known as the gold loan price per gram, this value represents the loan amount one can get for every gram of gold. In other words, it is the amount a lender is willing to offer against one gram of gold.

There are two major factors that affect the gold loan per gram rate, which are:

Gold Purity: This is one of the major considerations while determining the per gram rate for a gold loan. The purity of gold ornaments is measured in karats. If you are going to pledge gold ornaments with higher purity (22 karats or more), you'll get a better per gram rate while availing a gold loan.
Current Market Rate: Another factor that affects the gold loan per gram rate is the current market rate of gold. When the price of gold rises, it will also lead to an increase in per gram value. Similarly, a drop in the market price of the metal results in a lower gold loan rate per gram. For example, if you want to get an idea about today's gold loan per gram rate, that can be calculated using the current market price.

Impact of Per Gram Rate on Gold Loan Amount

There are certain factors that affect the amount of a gold loan, with per gram value being one of them. It is directly proportional to the loan amount a borrower can obtain. Here is how the loan amount is calculated using the per gram rate:

For example, if you have 10 grams of 22-karat gold and the per gram rate is INR 5000, the total market value of your gold ornaments will be INR 50,000. Now the loan amount can be calculated using the prevalent LTV ratio. If the LTV ratio is 75%, you can borrow up to INR 37,500 by pledging your gold ornaments.

How to Maximize the Value of Your Gold Loan

Now that you know how the per gram rate affects the loan amount you're eligible for, the next question arises: how to maximise it. Here are a few tips that you can use:

Pledge High Purity Gold: Since gold purity is one of the key determinants for gold loan per gram rate, it is always best to pledge ornaments with higher purity. This way, you'll be able to get a better value for your ornaments.
Use Unembellished Ornaments: When you apply for a loan against your gold ornaments, it is best to avoid using the ones with fewer stones. The reason behind this is simple: most lending institutions don't consider the weight of embellishments at the time of gold valuation.

There is no denying that a gold loan is one of the easiest financing options. Are you also planning to apply for a gold loan to deal with a financial emergency? If yes, this is where your search ends. Muthoot Finance gives you the option to avail a loan against gold ornaments at competitive rates of interest. You can use our online gold loan calculator to check the interest rate and the loan amount you're eligible for. Alternatively, visit your nearest Muthoot Finance branch to know more.