Gold has been a valuable asset since ancient times, and its worth has not diminished over the years. Today, gold is not only a symbol of wealth and prosperity but also a convenient financing tool. One way to use gold as an financing instrument is through a gold loan. Bajaj Finance offers gold loans starting from Rs. 5,000 to Rs. 2 crore to help you manage your needs. Though the loan comes with no end-use restrictions, the maximum and minimum amount of loan you can borrow depends various factors.
Here are some of the factors that impact the value of gold loan you can get
1. Current per gram rate of gold
The current value for per gram of gold is subject to market fluctuations based on commodity market volatility and other related factors. The per gram value of gold defines the underlying value of 22-karat pure gold on the day of availing financing. It can thus impact the minimum and maximum gold loan amount.
2. Loan to value ratio
Loan to value ratio or LTV in the case of secured loans refers to the maximum financing value available. It is valued as a percentage of the collateralised asset’s current market value. In the case of gold loan, the cap to maximum financing is referred to as the percentage per gram of gold. RBI caps the LTV for online gold loans at up to 75%, which is subject to variation under certain circumstances.
3. Loan financing limit
Each lender sets the maximum limit to the total gold loan availability which caps the financing irrespective of one’s gold ownership and/or weight. With Bajaj Finserv, the maximum gold loan value is limited to Rs. 2 crore, while the minimum limit for gold loan is set at Rs. 5,000.
4. Weight of gold
Individual limits to gold loan availability also vary with the weight of a gold jewellery or ornament one owns. In combination with the per gram rate and LTV, it determines the ultimate gold loan availability.
It is essential to figure the affordability of this loan when determining the amount. It plays a vital part in calculating the EMI amount that you would pay in combination with the gold loan interest rate and repayment method opted.
Read Also: How does the gold rate affect your gold loan
Mistakes to avoid while applying for a gold loan
Following are some common mistakes that you should avoid when applying for a gold loan to secure the maximum gold loan per gram.
1. Not ensuring lender transparency in gold valuation
Accurate valuation of gold is critical to the total loan amount availability. It is important to check if a lender ensures transparency during such valuation or not to maximise availability of the total financing value.
2. Under/ overestimating gold’s value
When checking the maximum loan availability, consider ensuring that you do not under or overestimate your gold jewellery’s value. Account for only the weight of pure gold in such ornament excluding any gemstone or other metal it may carry.
3. Choosing lender with a low LTV
Borrowers may end up choosing a lender who offers LTV at a much lower rate than the maximum availability in the market. This can lead to reduced loan amount availability. As per RBI norms, LTV of up to 75% is available on gold per gram.
Selecting the highest LTV thus improves your chances of maximising loan availability. Compare available lenders to determine you select the financial institution that falls in the highest slab of maximum and minimum gold loan availability.
Frequently asked questions
The amount you can get for 1 gram of gold depends on the current gold rates. To find out the latest prices and estimate your loan amount, check Bajaj Finance Gold Rate page. Stay informed for accurate details and make well-informed decisions on your gold loan.
With Bajaj Finance, you can choose to pay the interest on a monthly, bi-monthly, quarterly, half-yearly, or annually basis as per your convenience. Please note that the principal amount and pending interest, if any, will be due for payment at the time of loan maturity.
To calculate the maximum gold loan amount you can get against your gold jewellery, you can simply use our gold loan calculator.