How To Calculate Gold Loan Per Gram?
Want to know the amount of gold loan per gram? Read the complete guide on per gram gold loan & the factors affecting the gold loan rate with IIFL Finance!
Investments in gold can prove to be a helpful asset in times of monetary requirement as you can mortgage it for a gold loan when the need arises. A simple and secured financial product, a gold loan allows you to borrow money by depositing your gold belongings as collateral. Banks, as well as non-banking finance companies (NBFCs), provide gold loan services. To better assess the value of your gold, you need to calculate the gold loan per gram.
In a world where financial needs often arise unexpectedly, we seek diverse avenues to secure quick and hassle-free loans. Gold loans have emerged as a popular choice, offering a unique solution by leveraging one's gold assets. To better understand this financial instrument, let's delve into the details of calculating the gold loan per gram rate.
What Is Per Gram Rate For Gold Loan?
A per gram rate refers to the amount you can borrow for every gram of gold that you pledge. This rate depends on a variety of factors such as the purity of gold and the weight of the gold item. At the same time, a 30-day average of gold prices for that quality of gold is another factor accounted for by the financier.
Let’s understand this calculation through an example.Suppose you own 50 gms of 24-carat gold, and the per gram rate of this gold is ₹3,000. This means that the value of your gold is ₹1,50,000 and you can get a loan of up to 75% of this amount, i.e. ₹1,12,500 against it.
The gold loan per gram rate is the value assigned to each gram of gold used as collateral for a loan. It serves as the foundation for determining the loan amount you can avail against your gold assets. Unlike traditional loans, gold loans are secured by pledging gold jewellery or ornaments.
Factors Affecting Per Gram Rate for Gold Loan
Apart from the purity and weight of the gold, the market rate of gold in your region will be a primary factor that affects the per gram rate for gold loans. Due to changes in demand, the gold prices keep fluctuating across India. Taxes and transportation costs may also affect the gold prices for the day. The gold rates change every day, thereby affecting the gold loan per gram rate.
For example, if you are applying for a gold loan in Maharashtra on a day when the gold price is ₹4,800 per gm and possess 50 gms of gold, you can avail of ₹1,80,000 as a gold loan (75% of ₹2,40,000).
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Other Factors To Consider While Availing Of A Gold Loan
In addition to the weight and purity of the gold, a financier may also look at your monthly income while assessing a gold loan application. This gives the lender an idea of your repayment capability. It is wise to check your monthly income before starting the application process.
However, your credit score is not considered when availing of a gold loan. Therefore, if you have a low CIBIL score, you can procure a gold loan.
Get The Maximum Value For Your Gold With IIFL
IIFL Finance has a simple and hassle-free gold loan process that approves loan applications in 5 minutes and disburses the gold loan amount within 30 minutes. Experts at IIFL can swiftly assess the purity of the gold jewellery and the weight of the yellow metal to be used as collateral.
IIFL Finance also offers gold loans anytime, anywhere via its Money@Home Gold Loan scheme. The gold loan amount starts from as little as Rs 3,000 with no maximum limit. IIFL Finance’s simple and transparent gold loan schemes have helped its AUM from the business grow to Rs 16,228 crore as of March 31, 2022.
How to calculate gold loan rate per gram as per gold purity
Calculating the gold loan rate per gram based on gold purity involves a straightforward process. Follow these steps:
Calculating Gold Loan Per Gram Rate
Let's break down the calculation process into simple steps to understand how the gold loan per gram rate is determined.
1. Gather Information
Before diving into calculations, gather essential information:
Purity of Gold: Identify the karat of your gold.
Weight of Gold: Determine the total weight of the gold items you plan to pledge.
Market Rate: Stay updated on the current market rate of gold per gram.
2. Calculate Total Value of Gold
Multiply the weight of the gold by the current market rate per gram to find the total value:
Total Value of Gold = (Weight of Gold in Grams) x (Current Market Rate per Gram)
3. Determine LTV Ratio
Understand the lender's Loan-to-Value (LTV) ratio, which represents the percentage of the gold's value they are willing to lend. LTV ratios vary among lenders and may range from 60% to 75% or more.
4. Calculate Loan Amount
Multiply the LTV ratio by the total value of gold to determine the potential loan amount:
Loan Amount = (LTV Ratio) x (Total Value of Gold)
By following these steps, you can easily determine the gold loan rate per gram based on the purity of the gold assets.
Example Scenario
Let's walk through a simple example to illustrate the calculation process:
Suppose you have 50 grams of gold, and the current market rate is Rs. 3,000 per gram. If the lender offers an LTV ratio of 70%, the calculations would be as follows:
Total Value of Gold = 50 grams x Rs. 3,000 per gram = Rs. 150,000
Loan Amount = 70% x Rs. 150,000 = Rs. 105,000
In this scenario, you could potentially avail a loan of Rs. 105,000 based on the pledged gold, market rate, and the lender's LTV ratio.
Factors Influencing Gold Loan Per Gram Rate
Several factors come into play when setting the gold loan per gram rate. Understanding these elements is crucial for borrowers to make informed decisions.
1. Purity of Gold
The purity of gold, measured in karats, significantly influences the per-gram rate. Higher-purity gold attracts a higher value per gram. Common purities include 18 karats, 22 karats, and 24 karats.
2. Current Market Rates
Gold loan per gram rates are closely tied to market rates. These rates fluctuate based on global economic conditions, demand and supply, and geopolitical factors. Regularly checking market rates helps borrowers stay informed.
3. Gold LTV Ratio
The LTV (Loan to Value) ratio determines the percentage of the gold's value that a lender is willing to provide as a loan. A lower LTV ratio results in a higher per-gram rate, as the lender adopts a more conservative approach.
A gold loan offers many advantages, making it a convenient and accessible financial solution for individuals in need.
Benefits of Gold Loan
One of the key benefits is the gold loan calculator, which allows borrowers to precisely determine the amount they can borrow based on the current market value of their pledged gold. The jewel loan interest rate is another highlight, typically being more competitive than traditional loan rates. The gold loan rate of interest is often lower due to the secured nature of the loan against gold. The process to apply for a gold loan is straightforward, and lenders may even provide the option of availing the loan at the comfort of one's home. Gold loan repayment is flexible, with various tenure options to suit individual financial capabilities. Borrowers need minimal gold loan documents and a simple application process making it a convenient option to meet any kind of financial needs.. Pledging gold for loan also ensures quick disbursal, making it an ideal choice for urgent financial needs.
Tips for Borrowers
Understanding the calculation process is essential, but being a savvy borrower involves more. Consider the following tips:
1. Compare Lenders
Different lenders offer varying LTV ratios and per gram rates. Compare multiple lenders to secure the best terms based on your financial needs.
2. Stay Informed about Gold Prices
Keep yourself updated on gold prices. Timely information empowers you to make decisions that maximize your loan amount.
3. Understand Terms and Conditions
Thoroughly read and understand the terms and conditions of the gold loan. Pay attention to interest rates, repayment tenure, and any additional charges.
Conclusion
Navigating the world of gold loans becomes simpler when armed with knowledge. The gold loan per gram rate, although seemingly complex, can be understood through a straightforward calculation process. By considering the purity of gold, current market rates, and the lender's LTV ratio, borrowers can make informed decisions and confidently utilize their gold assets to meet financial needs. Remember, the key is to stay informed, compare options, and choose a gold loan that aligns with your requirements.
FAQs
Q.1 How Is The Market Value Of My Gold Determined?
Ans. The market value of your gold is calculated according to the per gram market rate of gold on the day of the loan application. If you are pledging gold ornaments or jewellery, only the parts that are pure gold are considered valuable; other metals, stones, and gems are excluded from the calculations.
Q.2 What Affects The Gold Loan Per Gram Rate?
Ans. The weight and purity of the gold as well as the gold prices in your region on the day affect the gold loan per gram rate.
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Apply NowDisclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.
