Gold loans offer a convenient way to raise funds by pledging gold as collateral, making them a practical option for short-term financial needs. One of the most important factors that decides the loan amount is the gold loan gram rate, which determines how much you can borrow per gram of gold. This rate is calculated based on purity, weight, and prevailing market prices, along with regulatory limits set by lenders. Whether you are checking the gold rate today in Odisha or any other region, understanding how the gram rate is calculated helps you assess your borrowing potential and plan your loan more effectively.
How the Gold Loan Gram Rate is Calculated?
The gold loan gram rate is the loan amount you can get per gram of gold. It mainly depends on three factors:
- Purity of gold: Gold is measured in karats, and higher karat means higher purity. Since purer gold has more gold content, lenders offer a higher gram rate for 24K gold than for 22K or lower karat jewellery.
- Weight of gold: The loan amount is calculated based on the net weight of gold pledged, excluding stones or other materials. Higher eligible weight results in a higher total loan value.
- Current gold price: Lenders use the prevailing market price of gold on the day of loan application. If gold prices are high, the gram rate and potential loan amount also increase, and vice versa.
Lenders then apply a Loan-to-Value (LTV) ratio, which caps the final loan amount based on the gold’s assessed value.
The Role of the LTV Ratio in Gold Loan Calculation
The Loan-to-Value (LTV) ratio determines the maximum gold loan amount as a percentage of the pledged gold’s market value, calculated as (Loan Amount / Gold Value) × 100. RBI caps the LTV ratio at 75% to manage lender risk from price volatility or defaults. It enables borrowers quick funds (typically 65-75%) without selling gold, influenced by purity, credit, and market factors for safer lending.
How Gold Purity Affects Your Loan?
Gold purity plays a key role in deciding the gram rate for your loan. Purity is measured in karats, with 24K gold being nearly 100% pure, while most jewellery contains other metals for strength. Higher purity means higher loan value.
- 24 Karat Gold: Offers the highest gram rate, as it is nearly 100% pure gold.
- 22 Karat Gold: Slightly less pure (91.6% gold), and the gram rate will be proportionally lower than 24 Karat gold.
- 20 Karat Gold: This gold contains 83.3% pure gold, and its gram rate is lower than that of 22 Karat and 24 Karat.
When checking the gold rate today in Odisha or elsewhere, the gram rate varies by region, depending on gold purity levels. If you pledge items of different karat values, lenders may average the purity, which can reduce the overall gram rate and the final loan amount.
Understanding the Impact of the Gold Market Price
The market price of gold directly affects how much you can borrow. Gold prices change due to global trends, currency movements, and local demand, which in turn influence the gram rate used for loan calculations.
- Gold price fluctuations: Higher gold prices increase the gram rate and loan amount, while lower prices reduce how much you can borrow.
- Checking gold rates: It helps to check the gold rate today in Odisha or your specific region before applying. Financial marketplaces like Bajaj Markets can also help you compare loan options across multiple lenders.
Knowing current market conditions can help you apply at the right time and get better value for your gold.
Other Factors Influencing Gold Loan Calculation
Several other factors can influence the loan amount you can receive against your gold, including:
- Age and Condition of the Gold: Lenders may evaluate the age and condition of the gold. Older, worn-out jewellery may fetch a lower gram rate than newer, well-maintained items.
- Reputation of the Lender: Different lenders may offer different gram rates depending on their policies. Well-established banks or financial institutions may offer competitive rates compared to local lenders.
- Loan Tenure: The tenure of the loan can affect the rate at which the loan is disbursed. Shorter loan tenures might have higher monthly EMI payments, while longer tenures may have lower EMIs, though the total interest paid would increase.
Conclusion
The gold loan gram rate is shaped by gold purity, net weight, market price, and the applicable LTV ratio. Understanding these factors helps you compare offers and plan your borrowing better. Platforms like Bajaj Markets can also help you compare loan options across lenders and make informed decisions.
