Which Carat Gold is Better?

Which Carat Gold is Better?

Learn about different carat ratings in gold, their uses, and which is better for jewellery, investment, and gold loans.

Rs. 5,000 - Rs. 2 crore

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What is ‘carat’ in gold?

Carat simply tells you how pure your gold is. Gold purity is measured out of 24 parts, so 24-carat means pure gold. If a piece is 18-carat, it means 18 parts are gold and the remaining 6 parts are other metals like copper or silver. This mix makes the jewellery stronger. In India, people usually buy 22-carat for traditional jewellery and 18-carat for designs that need extra durability. The higher the carat, the more gold it has, which is why higher-carat gold looks brighter and richer in colour.


How gold purity is measured in carat gold?

Gold purity in carats is calculated based on how much gold is present in a 24-part mix. So, if something is 18-carat, it means 18 parts are gold. To know the purity percentage, the number is divided by 24. For example, 18-carat gold comes to 75% purity. In India, hallmarking helps customers trust what they buy. Jewellers use hallmark symbols to show the exact carat value, ensuring customers get genuine and correctly measured gold every time.


Does a higher carat mean higher quality gold?

A higher carat does mean more gold, but that does not always mean it is better for daily use. Pure 24-carat gold is very soft and can scratch easily, so it is not ideal for everyday jewellery. Lower-carat gold, like 18-carat or 14-carat, has other metals mixed in, making it stronger and more durable. So, the “better” option depends on where you will wear it. If you want durability, lower-carat gold works well. If you prefer purity and a bright yellow shine, higher-carat gold is the right choice.
 

Durability and wearability of different carats of gold

Durability and wearability vary significantly across different carat golds. Higher carat gold, such as 22-carat or 24-carat, while visually appealing and more valuable due to its purity, is softer and more prone to scratches and deformation. This makes it less ideal for items subjected to daily wear and tear. Conversely, lower carat gold, like 18-carat or 14-carat, contains a higher proportion of alloyed metals, enhancing its strength and making it more resistant to damage. For those seeking long-lasting, durable jewellery for everyday use, lower carat gold options provide a balance of beauty and practicality.
 

Factors to consider when selecting a carat of gold

Before choosing the right carat gold for your jewellery, it helps to keep a few simple points in mind so you pick what works best for your needs.


  • Purpose of use: If you want jewellery for daily wear, lower carat options like 18-carat gold are stronger and more durable.
  • Budget: Higher carat gold costs more because it contains more pure gold, so choose a carat that fits your spending plan.
  • Colour preference: Higher carat gold has a brighter yellow shade, while lower carat gold looks slightly lighter due to mixed metals.
  • Resale value: Carat choice affects resale. In India, 22-carat gold is widely preferred because it balances purity, strength, and good resale demand.
     
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Latest RBI updates

Section

Parameter

Applicable Details

 

Eligibility Criteria

Gold purity accepted

18-22 Karat for jewellery and ornaments

24 karat for gold coins

Eligible collateral types

Gold ornaments, jewellery, and coins

 

 

 

 

 

 

 

 

 

Eligible limit for each collateral type

Ornaments

Total pledged weight across all loans must not exceed 1 kilogram

Gold coins

The total weight of gold coins pledged cannot be more than 50 grams.

Gold Jewellery

As per maximum loan amount.

Overall exposure limit

The total loan exposure across ornaments, jewellery, and gold coins together must not exceed the maximum loan limit of Rs. 2 crore.

Collateral protection

 

Any loss, damage, or discrepancy in the quantity or purity of your pledged gold identified during audit, return, or auction will be recorded and promptly communicated to you or your legal heirs. The reimbursement or compensation process, as per company policy and SOP, will be clearly explained. Delays in collateral release due to lender fault will attract compensation of ₹5,000 per day.

 

 

 

Gold loan renewal

Renewal parameter

You can request renewal of your gold loan before maturity if it remains in standard status and within permissible LTV limits. This facility is available only to existing customers. For bullet repayment loans, accrued interest must be cleared. Renewals are subject to credit checks, fresh applicable charges, and are not allowed after maturity.

 

 

Gold loan top up

Top up parameter

Top-up is allowed before maturity, subject to regulatory LTV limits, credit assessment, and customer eligibility. Fresh fees and charges apply. Top-up after maturity is not permitted, even if dues are outstanding. Top up facility is available only to existing users.

 

 

 

LTV (Loan to Value)

For loans up to Rs.2.5 lakh

85%

For loans between more than Rs.2.5 lakh to Rs.5 lakh

80%

For loans from more than Rs. 5lakh to Rs. 2 crore

75%

 

 

 

Gold Value

Evaluation parameter

As per the latest guidelines, gold loans are offered against specific purity of gold jewellery, ornaments and gold coins, valued using lower of the average closing price for your gold's specific purity over the last 30 days or the previous day's closing price, as published by IBJA or a SEBI-regulated commodity exchange, within prescribed limits and subject to KYC and timely repayment.

Understanding cost vs value of gold by carat

The cost of gold jewellery increases with the carat value due to the higher gold content. However, value is not solely determined by purity. High carat gold, such as 22-carat or 24-carat, offers excellent purity but at a premium price and reduced durability. Lower carat gold, like 18-carat, is more affordable and provides enhanced strength, making it suitable for everyday wear. When evaluating cost versus value, consider the jewellery's purpose, longevity, and your budget. In India, while higher carat gold is often seen as an investment, lower carat gold offers practical value for those seeking durable, stylish pieces for regular use.  


Pro tip: As gold prices change with global trends, knowing your borrowing capacity can help you stay prepared. Check your gold loan eligibility to know how much you can borrow today.

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Disclaimer

Bajaj Finance Limited (BFL) has the sole and absolute discretion, without assigning any reason to accept or reject any application as per BFL policy. *