How is gold loan amount calculated?
Gold ownership offers individuals financial security due to the ever-increasing market value of this precious metal. Even as an idle jewellery piece, its underlying asset value remains high and can fetch a significant price when sold or traded. Luckily, you do not need to lose gold ownership to raise funds today. You can instead opt for a loan against your gold jewellery. The loan amount available depends on the gold loan per gram rate followed by the lender.
You can use the Bajaj Finserv Gold Loan Calculator which features the changing gold loan per gram rate to assess the maximum loan amount availability as per the weight the of gold jewellery you own.
What does gold loan per gram mean?
Gold loan per gram refers to the loan amount a borrower can receive against each gram of pledged gold. It is calculated based on the gold’s purity, weight, and the lender’s loan-to-value (LTV) ratio.
For instance, if the market gold price is ₹5,000 per gram and the lender offers an LTV of 75%, the gold loan per gram would be:
Gold Loan per Gram = ₹5,000 × 75% = ₹3,750
This means for every gram of gold pledged, the borrower can receive ₹3,750 as a loan. Since 916 gold (22-carat) is commonly used, the loan amount may slightly vary based on purity. Higher purity gold attracts better loan amounts.
To maximise the loan, borrowers should compare lenders' offers and check real-time gold rates before applying. Calculating gold loan per gram helps in estimating the total amount available, ensuring informed financial planning.
How to calculate gold loan rate per gram as per gold purity?
The process of gold loan per gram rate calculation is quick and simple. Available gold loan per gram calculators works on the following basis to arrive at computed results.
- The weight of the gold jewellery to be pledged is considered.
- The purity level of gold is determined, with ideal purity sought at 18-22 karat.
- Average price of 18-22 karat gold jewellery is computed for the past 30 days.
- The amount sanctioned is calculated as per the lender’s LTV.
The purity of a gold ornament closely determines and impacts the ultimate gold loan per gram rate computed.
Now that you know the process of calculating the per gram rate, know the various benefits of availing a gold loan from Bajaj Finance.
Benefits of taking a gold loan
- Financing against the underlying asset value: You can easily utilise the underlying asset value of gold ornament to raise necessary funding urgently.
- High loan amount: The purity and weight of gold offered for the pledge can fetch gold loan funding of up to Rs. 2 crore easily.
- Minimal paperwork: The documents list for a gold loan is short and involves only the address proof and KYC documents.
- Affordable rates of interest: Secured nature of financing makes the gold loan interest rates more affordable.
- Multiple repayment options: Choose your suitable repayment method to fit your monthly budget.
- Insurance of pledged gold: When availing a gold loan from Bajaj Finance, you also enjoy free insurance coverage for gold for as long as it remains in our custody. Such coverage is provided against theft and misplacement of stored gold.
- Partial release of gold ornaments: If you need some of your pledged gold, you can secure partial release of the pledged item against loan repayment of an equivalent amount.
Along with these benefits, it is equally important to understand the gold loan per gram rate calculation. You may also use the gold loan calculator when planning your loan application. It allows you to gauge repayment liability and helps make affordable borrowing decision.
How to calculate gold loan per gram rate for 22k and 24k
Calculating the gold loan per gram rate for 22k and 24k gold involves understanding the market price of gold and its purity. The first step is to find the current market price of gold per gram. For 24k gold, this is straightforward, as it represents pure gold. For 22k gold, multiply the price of 24k gold by 0.916 (which represents the purity). This will give you the loan value for both types. Many lenders also consider other factors like demand and location, which can slightly alter the rates.
What is the current gold loan rate per gram?
The current gold loan rate per gram varies based on market conditions, including the global gold price and local demand. As of now, it is essential to check real-time rates, as they fluctuate throughout the day. Factors such as economic indicators and geopolitical events also impact gold prices.
How gold loan amount is calculated based on purity and weight
The gold loan amount is determined by the purity and weight of the gold. Lenders assess the total weight of the gold jewellery or items and multiply it by the gold price per gram, adjusted for purity. For instance, if you have 100 grams of 22k gold, its effective weight in pure gold is 91.6 grams. The total loan amount is then calculated using the market price for that purity. This ensures that you receive a fair valuation based on the actual value of the gold being pledged.
Step-by-step guide to calculate gold loan amount per gram
Calculating the gold loan amount per gram involves a few straightforward steps:
- Determine the weight of gold: Weigh the gold items you plan to pledge.
- Find the current market price: Check the current price of gold per gram.
- Assess purity: Identify whether it is 22k or 24k gold.
- Calculate effective weight: For 22k gold, multiply the weight by 0.916.
- Calculate loan amount: Multiply the effective weight by the market price per gram.
How purity impacts gold loan per gram rate
Gold purity significantly affects the loan amount you can secure. Higher purity gold, such as 24k, typically garners a higher loan rate compared to lower purity, such as 22k. This is because lenders prefer to finance gold that has a higher intrinsic value. The effective weight of the gold (its purity) directly influences the valuation, which is why understanding the purity of your gold is essential for maximising your gold loan benefits.
How to calculate EMI for gold loan based on per gram rate
With Bajaj Finance, you can opt to repay your gold loan interest on monthly, bi-monthly, quarterly, half-yearly, or annual basis.
Bajaj Finance does not treat the interest repayment as EMI. But to generally calculate the EMI for a gold loan based on the per gram rate, follow these steps:
- Determine the loan amount: Calculate how much you can borrow based on the weight and purity of your gold.
- Interest rate: Find out the interest rate applicable to your gold loan.
- Loan tenure: Decide the tenure for which you wish to take the loan.
- Use the EMI formula: The EMI can be calculated using the formula:
EMI = P*r*(1 + r)^n/(1 + r)^n – 1
Where P is the principal loan amount, r is the monthly interest rate, and n is the number of months. This will help you understand the monthly payment obligations for your gold loan.
How to use current gold rates to calculate loan amount?
Understanding how to calculate gold loan per gram helps borrowers estimate the loan they can get against their gold. Lenders determine the loan amount based on the gold’s purity, weight, and the rate per gram gold loan set by the market.
For example, if the current gold price is ₹5,000 per gram and the lender offers a 75% loan-to-value (LTV) ratio, the calculation is:
Loan per Gram = ₹5,000 × 75% = ₹3,750
This means for 10 grams of 22-carat gold, the loan amount would be ₹37,500.
Lenders update their gold loan rates daily based on market fluctuations, making it crucial to check the latest rate per gram gold loan before applying. By tracking current gold prices, borrowers can secure higher loan amounts when gold rates are favourable, ensuring maximum financial benefits.
Tips to calculate the highest gold loan amount per gram
To maximise your gold loan amount per gram, consider these tips:
- Choose higher purity gold: Lenders offer better rates for 24k gold.
- Stay updated on market prices: Track the current gold rates to time your loan optimally.
- Weigh your gold accurately: Ensure you get an accurate weight of your gold to avoid underestimations.
- Shop around: Different lenders offer varying rates, so compare offers to find the best deal.
- Keep your gold in good condition: Well-maintained gold items may fetch a better rate. Following these tips can ensure you receive the highest possible loan amount for your gold.
Bajaj Finserv app for all your financial needs and goals
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Frequently asked questions
To calculate the gold loan per gram rate, start by determining the current market price of gold per gram. Then, assess the purity of your gold, whether it's 22k or 24k. For 22k gold, multiply the 24k gold price by 0.916 to get the effective rate. This gives you the amount you can borrow against each gram of gold based on its purity.
The gold loan per gram rate is influenced by several factors, including the current market price of gold, the purity of the gold, and demand and supply dynamics. Additionally, economic conditions, international gold prices, and lender policies also play significant roles. Local market competition and gold quality can further impact the rate offered by various lenders, so it's crucial to compare offers.
The loan amount you can secure per gram of gold primarily depends on the gold's purity and current market price. Typically, lenders offer around 75% to 90% of the gold's value, known as the loan-to-value (LTV) ratio. For example, if the gold price is ₹5,000 per gram, and you have 100 grams of 22k gold, you could receive a loan amounting to ₹3,750 to ₹4,500 per gram.
Lenders calculate the gold loan per gram rate by assessing the current market price of gold, the purity of the gold being pledged, and the prevailing economic conditions. They determine the effective gold value by factoring in the purity percentage. This value is then multiplied by the lender's loan-to-value (LTV) ratio, which dictates how much they are willing to lend against the gold's market price.
The loan-to-value (LTV) ratio significantly impacts the gold loan amount by determining how much of the gold's value lenders are willing to finance. A higher LTV ratio means you can borrow a larger percentage of your gold's value, while a lower LTV means less financing. Typically, lenders offer LTV ratios ranging from 75% to 90%, so understanding this ratio helps you gauge the potential loan amount based on your gold's value.
Market gold prices directly impact the loan per gram value, as lenders determine gold loan amounts based on the prevailing gold rate. When gold prices rise, the rate per gram gold loan increases, allowing borrowers to secure a higher loan amount. Conversely, if gold prices drop, the loan per gram value decreases, reducing the amount one can borrow.
For example, if the gold price is ₹5,000 per gram with a 75% loan-to-value (LTV) ratio, the loan per gram would be ₹3,750. If the gold price falls to ₹4,800, the loan per gram drops to ₹3,600, affecting overall borrowing capacity.
