Understanding gold valuation to get the most of your jewellery

Apr 06, 2020

Understanding gold valuation to get the most of your jewellery

Gold trading takes place across several exchanges on a daily basis, which in turn, influences the rate of gold. The demand, supply, global economic conditions, and currency fluctuations all figure into what the gold rate for a given day is going to be. The gold rates for pure gold in India are updated every day in newspapers, as well as websites of banks and exchanges. Gold rates for jewellery can vary depending on where the gold is being purchased from and for how much.

Gold Valuation for Loans

When it comes to gold valuation for a loan, the sanctioned amount is subject to the purity of the gold and existing gold rates. The higher the purity of the gold, the higher the loan amount sanctioned will be. If you know the purity of your gold, this can be verified through a gold loan calculator as well. Most lenders these days have in-house gold jewellery valuation teams as well as online gold valuation mechanisms in place, to help borrowers find out how big a loan they can get for their gold coins or jewellery.

The differing gold valuation across lending platforms can also prove to be beneficial for borrowers with existing gold loans. A gold loan transfer to a company with higher loan-to-value

(LTV) ratio can increase the loan amount, and may even offer lower interest rates, making borrowing much more affordable. A gold loan transfer scheme can easily be availed by repledging the gold and completing the KYC process once again.

Factors Considered In The Gold Valuation Process For Gold Loans

  • Gold Karats

The purity of the gold being offered as collateral plays a major role in the loan amount that can be granted. This is typically measured in Karats (k). This is not to be mistaken for Carat (ct), which is the standard used for measuring the weight of diamonds.

Gold jewellery typically contains 22k gold owing to the presence of alloys such as copper, silver, zinc, and cadmium. This is done to make the gold harder and resistant to damage. The colour of gold in jewellery also varies with the variety and ratio of alloys incorporated.

The quality of the gold used in jewellery generally ranges from 18k to 22k. Therefore, a pledge with 22k gold jewellery is likely to be granted a higher loan amount than jewellery containing 18k gold.

  • Lender’s LTV Rates

According to the RBI’s guidelines for the issuing of gold loans, all banks and NBFCs are required to adhere to an LTV ratio limit of 75%. Borrowers, therefore, do not get loans on the entire value of their gold because lenders hold on to the difference.

  • The Current Gold Per Gram Rate

Gold rates fluctuate every day as they are dependent on various external factors. According to the RBI’s guidelines, lenders are required to use the average of the gold per gram rates for the last 30 days, for their gold valuation process. For instance, if this average per gram value happens to be Rs 4200, then the per gram value for gold jewellery of 22k purity will be Rs 3850 (4200 * 22 = 92400 / 24 = 3850).

  • The Presence of Stones & Gems in the Jewellery

All kinds of gold coins, ornaments, and jewellery are accepted as collateral for gold loans. The gold jewellery valuation process is carried out in-house by the lenders once the borrower has filled out a gold loan application. Some even employ third-party gold jewellery valuation specialists. The value of any precious stones, gems, and diamonds are not taken into account for a gold jewellery evaluation process or an online gold valuation process. Gold coins and bars are more valuable than gold jewellery and attract higher loan amounts.

  • Weight of the Gold 

One of the primary factors considered by an online gold valuation tool to determine the loan amount that can be dispensed is the weight of the gold. The weight of the gold is estimated after subtracting the weight of any stones, diamonds, gems, and attachments that form part of the jewellery being pledged. The more the weight of the gold contained in an article of jewellery being pledged, the higher the loan amount that can be granted. The jewellery that is being pledged for a gold loan must contain a minimum of 10 grams of gold for it to be accepted as collateral.

Every one of the above factors weighs into the gold valuation process to determine the loan amount that can be dispensed for the gold being offered as collateral.

NBFC Interest Rates (per annum) Processing Fee Loan Tenure  Loan Amount
Rupeek 10.68% – 22.7% 0% 6 months  Rs. 15k-Rs. 1.5 Cr
Manappuram Gold Loan 19% – 29% Rs. 10 3 months Rs.10k-Rs.1 Cr
Muthoot Finance Gold Loan 12% – 24% 0.25 – 1% 12 months Rs.15k-Rs.1Cr
Muthoot Fincorp 12% – 27% Rs. 12 – 20 12 months Rs. 1.5K-Rs.1Cr
Bajaj Finance Gold Loan 14% – 26% 1% 12 months Rs.15k-Rs.15Lakh
IIFL Gold Loan 9.24% – 24% Nil 11 months Rs.10k-Rs. 15 Lakh

If you’re looking for the highest possible loan amount that you can get for your gold jewellery, coins, or bars, then Rupeek is your answer! With the highest LTV ratios, lowest interest rates,

Our state-of-the-art online gold evaluation tool is the latest in fintech innovation and technology, offering borrowers who wish to obtain gold loans an incredibly user-friendly, hassle-free, and quick gold valuation and loan approval experience.