Which Type of Gold Ornament Gives You the Highest Value per Gram on Gold Loans?

Banks and financial institutions offer Gold Loans by evaluating the ornaments and calculating the loan amount based on the gold’s weight and purity. Different types of ornaments have varying values when it comes to loan eligibility. Ornaments, such as plain bangles or chains, have the highest value per gram of gold, depending on their purity, design, and weight.

Borrowers often ask: Which type of gold ornament gives you the highest value per gram on Gold Loans? This blog covers which gold ornaments provide the highest loan value per gram, how lenders calculate it, and tips to maximise your loan amount.

How Lenders Calculate Value on Gold Loans?

It is essential to understand how lenders calculate the loan amount before exploring the different types of gold ornaments that offer the highest value. Here are the main factors:

Purity of Gold

The most crucial factor is the purity of gold, which is quantified in karats. The more the karats, the purer the gold. For instance, 24-karat (k) gold is of the highest purity; however, ornaments are made of 22-karat gold. The purer the gold is, the higher the loan amount you can obtain.

Weight of Gold

The lenders will only consider the actual gold content in your ornament. Pearls, stones, and other non-gold items are excluded from valuation. Ornaments having higher gold content will provide you with a higher loan amount.

Per Gram Value

The loan amount is calculated based on the per-gram value of gold. This value depends on the current market price of gold and the lender’s internal policies.

Loan-to-Value Ratio (LTV)

In India, as per RBI regulations, lenders generally offer Gold Loans of up to 80% of the gold’s current market value. This means the loan amount will be lower than the actual value of the gold you pledge.

Also Read: Why is the Gold Price Increasing in India? Reasons Behind the Rise

Which Types of Gold Ornaments Offer the Highest Value?

Now, let’s understand which types of gold ornaments offer the best value per gram for a loan. 

1. Plain Gold Jewellery (Chains, Bangles, Rings)

Plain gold jewellery with minimal or no design and no stones or other materials tends to receive higher loan amounts, as it typically contains 20 to 22 karats of gold. As there are no stones or heavy designs, the entire piece is made of pure gold. Examples are plain bangles, chains, or simple rings.

2. Gold Coins and Bars

Among the most valuable types of gold are coins and gold bars, which are usually 24-karat. They do not consist of precious stones and decorative work, guaranteeing that the entire weight counts toward the loan. They are therefore perfect for optimising loan value.

Also Read: What is the Difference Between 22 Karat and 24 Karat Gold?

3. Heavy Gold Ornaments (Wedding Sets, Thick Bangles)

The highest loan value is offered by heavy gold jewellery that is made entirely of gold. You can obtain a considerable loan amount even with an 80% LTV ratio, as the entire value is backed by gold. Heavy bangles, thick chains, and wedding jewellery sets are the best examples.

Even though the loan value per gram is high, the final sum will still be determined by the purity of the gold.

4. Antique or Designer Gold Jewellery

Antique or fashionable gold jewellery may command a premium in the market due to its design and craftsmanship. However, for Gold Loans, lenders consider only the gold content, ignoring the added value of antiques or intricate work.

Examples include Kundan jewellery and antique temple jewellery. As a result, the loan amount is moderate, reflecting the actual gold content rather than the artistic or historical value.

5. Traditional Ornaments with Stones

Most gold ornaments in India are set with stones, pearls, or enamel. While they may look elegant, their loan value is lower because lenders do not count the weight of non-gold materials, significantly reducing the per-gram value compared to plain gold jewellery.

Also Read: 8 Important things to consider before applying for an instant gold loan

How to Get the Best Per-Gram Gold Loan Value?

Here are some simple yet effective tips that will help you get the best per-gram Gold Loan value:

• Select Plain Ornaments: At the time of pledging gold for a loan, select plain gold bangles, chains, or coins and not studded or designer ornaments.
• Check Purity: Make sure your gold ornaments are of 22K for the best loan value.
• Do Not Use Gold with Stones: As valuable stones are not included in the weight, select a gold ornament that does not have stones.
• Weigh in Advance: Get your jewellery weighed at a trusted jeweller to determine the approximate weight of gold.
• Compare Lenders: Different lenders will have varied per-gram rates; hence, check and compare them before pledging your gold ornaments.

Read Also: 8 Important things to consider before applying for an instant Gold Loan.

To Conclude

The type of gold ornaments you pledge as security for a Gold Loan will directly affect the loan amount that you obtain. Plain gold jewellery, coins, and bars are valued the highest per gram as they are purest and contain no other material. Conversely, heavily ornamented or stone-studded jewellery has a lower loan value, as lenders consider only the gold content.

Looking for a Gold Loan? Connect with Poonawalla Fincorp and access funds at affordable interest rates, with minimal documentation, and receive quick approval. Apply now for a Gold Loan and get the maximum loan value per gram of your gold!

FAQs

What is the lowest purity of gold that can be loaned?

According to RBI standards, to be eligible for Gold Loans, ornaments must be of a minimum 22-karat gold.

Is it possible to obtain a loan secured by old, antique jewellery?

Yes, however, the condition of the ornamentation, hallmarking, and purity of the jewellery will determine the value of the loan.

Are gold coins from jewellers accepted by all lenders?

Some lenders may not accept them, as they prefer gold coins or bars from recognised banks or accredited brands, whose purity and authenticity are easier to verify.

Can I pledge lightweight gold jewellery for a Gold Loan?

Yes, you can; however, as the lightweight jewellery has less gold content, the loan amount will be smaller compared to heavier ornaments.

Can I increase my Gold Loan amount by combining multiple ornaments?

Yes, it is possible to pledge more than one gold ornament at a time. The entire gold content and purity will be evaluated by lenders, which may enable you to obtain a larger total loan amount.