Gold Loan Rate Per Gram: How Does It Affect Your Gold Loan?
Calculating the loan amount using the per gram rate is very simple. Want to know hoe gold loan rate per gram affects your gold loan amount? Read Now!
In India, numerous gold owners have purchased gold ornaments but keep them safe in bank lockers. However, you can leverage this gold to acquire a loan during a cash crunch. A gold loan helps raise immediate and adequate capital from lenders such as banks or NBFCs. However, you must consider the gold loan rate per gram that affects the loan amount you receive before applying.
If you want a gold loan, you must understand everything about a gold loan and how the rate per gram affects the loan amount.
What Are Gold Loans?
Gold loans are a funding avenue to raise immediate capital during an emergency or for miscellaneous expenses. Lenders provide a certain percentage of the loan value based on the current gold loan rate per gram.
For example, if lenders provide 75% of the gold value as the loan amount and you have pledged gold worth Rs 1,00,000, the lender will offer you Rs 75,000 as the loan. Gold loans are an ideal way to raise capital to cover any expense. As there are no restrictions on the end use of the loan amount, the borrowers can use the amount for any legal purposes.
However, like other types of loans, the borrowers are legally liable to repay the offered loan amount to the lender with interest within the loan tenure. If a borrower fails to repay the loan, the lender has the legal right to sell the pledged gold to recover the outstanding loan amount after default.
What Is The Gold Loan Rate Per Gram?
In India, most lenders offer 75% of the total market value of the gold as the loan amount. Lenders use gold loan per gram or gold loan rate per gram to calculate and represent the loan amount one can get for every 1 gram of pledged gold.
Numerous factors influence the gold loan amount per gram, as the loan amount depends on the weight of the gold and its quality. The higher the weight and the quality, the higher the gold loan rate per gram, as the gold value would be more.
Factors Affecting Gold Loan Rate Per GramThe price of gold is dynamic and fluctuates regularly. Hence, it is important to check the prices as they directly affect the gold loan rate per gram today or any other day. However, numerous factors affect gold prices and, indirectly, the gold loan rate per gram.
• Demand and SupplyIf the demand for gold is higher than the supply, the gold price increases. On the other hand, if the supply is higher than the demand, the price of gold decreases. With a higher gold price, you may get a higher gold loan amount as the gold value will be higher. However, the gold loan amount will decrease if the current market gold price is lower.
• Economic SituationAs gold is a tradable commodity, investors prefer to buy gold physically or online during a recession, inflation, etc. As such negative economic factors create a bearish sentiment in the stock markets, investors choose to invest in commodities such as gold when the other asset classes’ value slips. Since gold sees higher demand, it can also allow borrowers to attain a higher per-gram value for their gold with a higher loan amount.
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• Interest Rates
India's apex bank, the Reserve Bank Of India, manages the money flow in the market by increasing or decreasing the key interest rates such as repo rate and reverse repo rate. The prevailing interest rates also affect the gold prices and the loan amount you may get for your gold.
Such interest rates have an inverse relationship with domestic gold prices. People prefer to buy gold when the interest rates decrease, increasing the demand and prices.
How Does Gold Loan Rate Per Gram Affect Your Gold loan?
The main reason the gold rate per gram affects the gold loan application is the Loan-To-Value ratio. The Loan-To-Value ratio is the loan amount lenders offer a borrower after ascertaining the current value of the gold articles. Currently, the Reserve Bank of India allows all lenders to have an LTV ratio of 75%. Since the gold loan amount is based on the current value of the gold in the domestic market, the rate per gram directly affects the gold loan and how much the lender will offer.
Suppose you have gold ornaments, and their value is Rs 5,00,000 after ascertaining their value by looking at the gold loan rate per gram today. In such a case, based on the LTV ratio, the lender can provide 75% of 5,00,000, which amounts to Rs 3,75,000 as the highest loan amount.
However, if the gold rate per gram increases in the market, the value of the gold will also increase. Suppose with the price rise. The same gold amounts to Rs 5,20,000 now; the lender will offer you Rs 3,90,000 based on the LTV ratio. This is how the gold loan rate per gram affects the gold loan amount.
Avail Of An Ideal Gold Loan With IIFL FinanceWith IIFL Gold loan, you get industry-best benefits through our process designed to offer instant funds based on the value of your gold within 30 minutes of application. IIFL Finance Gold Loans accompany the lowest fee and charges, making it the most affordable loan scheme available. With a transparent fee structure, there are no hidden costs you have to incur after applying for the loan with IIFL Finance.
Q.1: What are the interest rates on IIFL Finance Gold Loans?
Ans: The interest rates on IIFL Finance gold loans are between 6.48% - 27% p.a.
Q.2: How can I apply for a Gold Loan with IIFL Finance?
Ans: Getting a gold loan from IIFL Finance is super easy! Click on the ‘Apply Now’ button mentioned above and fill in all the required details to get a loan approved in few minutes.
Q.3: What is the loan tenure for the IIFL Finance gold loan?
Ans: The loan tenure for an IIFL Finance gold loan depend on the financial institution.
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