How is Your Gold Loan Amount Decided

Understanding how is your gold loan amount decided

If you have ever wondered how is your gold loan amount decided, it mainly depends on the current value (as per IBJA rate) of your gold jewellery. Since a gold loan is a secured loan, lenders assess your ornaments to determine how much you can borrow. After submitting your online application, you will be given an appointment at your nearest branch. There, your gold jewellery is weighed, and its value is calculated using the 30-day average of the closing gold price as per the Bombay Bullion Association Ltd. However, you will not receive the full value of your gold. As per RBI guidelines, the maximum loan-to-value (LTV) ratio is capped at a certain percentage your gold’s worth.
 

When you renew your gold loan

Gold loans typically come with a repayment tenure of up to 12 months. Once this term ends, if you need more time, you can renew your loan by applying for a new one after clearing the previous amount. During renewal, your gold is revalued based on the current market price on that day. If gold prices have increased, you may be eligible for a higher loan amount. On the other hand, if prices drop, the amount you can borrow may reduce. Understanding how is your gold loan amount decided during renewal helps you plan better and take advantage of rising gold values.

Pro tip: Before you pledge your gold, know your options. Check your gold loan eligibility and choose the right amount and tenure.