• June 14, 2023

Gold Loan Rate Per Gram: How Does It Affect Your Gold Loan?

Gold Loan Calculator

Gold is one of the most valued metals and an easy investment option in financial emergencies. When in need of urgent capital requirements, gold loans are one of the easiest and most convenient ways of getting funds. A gold loan is a good option for using idle gold assets at home or in bank lockers to fulfilling short-term financial needs. While availing of a gold loan, the per gram rate refers to the amount a borrower can get for one gram of gold pledged. To avail of one, here’s everything you need to know about the gold loan rate per gram for a seamless loan experience.

Factors Affecting Rate Per Gram of Gold Loan

The price of the per gram gold for a gold loan that you check today is dynamic and fluctuates regularly. The numerous factors that affect the gold loan rate per gram include:

Purity of the Gold

Any lender that provides a gold loan would check the gold’s purity before approving the loan. The purity of the gold is measured in Karats, which is one of the key deciding factors of the final loan amount one can get. One must note that to get the highest gold loan amount per gram rate, gold assets with a minimum purity that is 22 Karat must be pledged.

Current Market Rate

The current market rate of gold also affects the gold loan rate per gram. It is important to check the prevailing price of gold as they directly affect the gold loan rate per gram today or any given day. When the price of gold appreciates, the borrowing capacity of the borrowers also increases. Conversely, when the gold prices are muted, the borrower may not necessarily get a high loan-to-value amount.

Loan-to-Value Ratio

The LTV, an acronym for Loan-to-Value ratio, is lenders’ maximum permissible gold loan per gram rate. Any bank or NBFC can approve a loan against gold according to the loan-to-value ratio only. The Reserve Bank of India decides the LTV ratio from time to time, which the banks and NBFCs must adhere to before sanctioning the loan amount.

Impact of Gold Loan Rate per Gram on the Loan Amount

The gold loan rate per gram is calculated by banks and NBFCs using the total weight of the gold pledged. Certain factors, such as the pledged gold’s weight and purity, decide the gold loan per gram rate. The gold price per gram on a particular day further determines the rate per gram of gold. On the basis of the loan-to-value ratio, the lenders sanction the loan against gold. It must be further noted that any financial institution can offer a credit facility of up to 75% of a gold asset’s market value according to the Reserve Bank of India guidelines.

Impact of Gold Loan Rate per Gram on Interest Rate

Another facet of gold pricing where the guidelines issued by the Reserve Bank of India is controlling the interest rates. RBI manages the money flow in the market by decreasing or increasing key interest rates, such as reverse and repo rates. The prevailing interest rate issued by RBI affects the gold prices and the loan amount a borrower is entitled to get.

Impact of Fluctuations in Gold Loan Rate Per Gram

Similar to any other commodity, the value of gold also depends on its supply and demand chain. Hence, when the demand for gold increases compared to the sales, the gold price increases. Conversely, if the supply is higher than the demand, the price of gold decreases. With a higher current gold price, borrowers can get a higher loan amount. However, the gold loan amount will decrease if there is a decrease in the current market price of the gold.

Tips for Managing Gold Loan Rate Per Gram

With a loan against gold, you get the benefits that ensure a seamless loan process. However, here are some tips that will help you in managing the gold loan rate per gram.

Current Price of the Gold

The price per gram of gold is dynamic and fluctuates on an everyday basis. To get the best gold loan amount per gram of gold, it is important to check the current price of the gold and then apply for a loan.

Use a Gold Loan Calculator

Most banks and NBFCs provide an online gold loan calculator that determines the amount of loan a borrower is eligible for. Use a gold loan calculator to calculate the loan amount based on the weight and purity of the gold you have.

Pledge High Purity Gold

It is a no-brainer that idle gold assets can reap benefits in dire financial situations. But gold assets with minimum purity reap more benefits. To provide a hedge against emergency financial situations, pledge high-purity gold to get a higher loan amount.

Choose Unembellished Gold Items

When applying for a gold loan, choose gold jewellery and ornaments with no or lesser stones. When lenders estimate the value of the pledged gold, they don’t weigh the purity of the embellishments attached to the gold.

Loan at Home by Muthoot Finance is one of the best gold loan providers in India that offers you a host of benefits, to begin with. The various gold loan schemes is designed carefully to offer instant funds to cater to emergency requirements. Get 24*7 access to your loan account, part payment facility, and free insurance of your gold, get gold milligram rewards with every transaction, and many other benefits at one platform. Additionally, the Loan at Home website offers a gold loan calculator that gives you the approximate value of your loan based on the gold you have before you raise a request. Check the gold price today for the best gold loan rate per gram at Muthoot Finance.

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