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| October 18, 2024

What Types of Gold Items can be used for Gold Loans

In India, gold loans are considered a convenient option for taking care of financial emergencies. Although the concept of borrowing money against gold ornaments has always been here, now things have slightly changed. In earlier times, people used to go to traditional moneylenders or pawnbrokers to pledge their gold assets to get money in return. Nowadays, there are several government-authorized financial entities (banks and NBFCs) that have a streamlined process for the same.

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Gold Loans: An Overview

A gold loan is a financial product designed for individuals in urgent need of funds. As the name suggests, one can obtain a loan by pledging some gold assets for a certain period of time. This is a secured loan where pledged gold ornaments act as collateral. Once the loan amount (principal + total payable interest) is fully paid, one can claim his/her pledged ornaments back.

Currently, there are a number of lending institutions offering quick and hassle-free gold loans at competitive interest rates. All you need to do is find a gold loan scheme that matches your requirements, and you can easily leverage the value of your gold items. Unlike other popular loans, gold loans offer complete flexibility in terms of end usage of funds. From covering educational expenses to paying for unplanned travel, and medical emergencies to business expansion, these loans can be availed for a variety of purposes.

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Types of Gold Items Accepted for Gold Loans

By now you must’ve understood what gold loans are and how they make things easier for individuals seeking financial assistance. Now the next question arises: ‘What kind of gold ornaments can be pledged to borrow money?’. Contrary to popular belief, not all gold items are treated equally while applying for a gold loan.

Read on to understand what gold items are accepted by lenders.

Gold Jewellery 

Almost every lending institution accepts all types of gold jewellery, such as rings, necklaces, bangles, earrings, bracelets, etc. However, the purity of gold and its total weight play a crucial role in determining the loan amount. Generally, gold jewellery with purity ranging from 18 to 23 karat is easily accepted for gold loans. Although gold jewellery items without any embellishments are considered the best option for gold loans, you can also use the ones with stones. However, the weight of any embellishments or stones is usually not considered when evaluating the gold for determining the loan amount.

Gold Coins

Another gold ornament that can be used to obtain a gold loan is gold coins. Coins typically have a standard weight and purity, making them easier to evaluate. As compared to jewellery items, these coins are known to have a higher purity percentage. As a result, the loan amount that you can obtain by pledging your gold coins is also higher. 

Gold Bars

In India, many people prefer buying gold bars to invest their money. Just like gold coins, these bars also have a higher purity percentage, resulting in a higher loan amount. Generally, gold bars come stamped with their weight and purity, which makes it easier for the lender to determine their value.

Suggested Read: A Complete Guide About Gold Loan Process And Eligibility

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Factors That Influence Gold Loan Amount 

When applying for a gold loan, there are several factors that can affect the loan amount you’re eligible for:

  • Purity of Gold: When you apply for a loan, the lending institution assesses the purity of items you’re going to pledge. This is measured in karats, and the higher the karat, the more valuable the gold item will be.
  • Weight: The weight of your gold assets is another key element that directly impacts the loan amount. The more weight your gold ornaments have, the higher your loan amount is going to be.
  • Market Prices: Another major factor that is taken into consideration is the current market price of gold. The per gram rate directly impacts the gold loan amount. For instance, if you’re applying for a loan today, the lending institutions will use today’s market rate to determine your gold loan amount.

Suggested Read: How To Choose Between A Short-Term And Long-Term Gold Loan

Gold loans offer a quick and efficient way to access funds without the need for extensive paperwork or credit checks. If you’re also looking for some financial aid, you can explore various gold loan schemes offered by Muthoot Finance. We offer hassle-free gold loans at the most competitive interest rates. To get an approximate idea about the loan amount you’re eligible for, use our online gold loan calculator. Or, you can also visit your nearest Muthoot Finance branch for more information. 

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FAQs

Which type of gold is eligible for a gold loan?

For a gold loan, lenders typically accept gold ornaments or jewellery made of 18 to 23 karat purity. Coins and bars may also be eligible, but usually only if issued by banks and within specific weight limits. The gold should be owned by the borrower and free from any encumbrances. Lenders assess the purity and weight before approving the loan amount based on the current market value.

What gold items are accepted for gold loans?

For gold loans, typically accepted gold jewelry such as bracelets, necklaces, bangles, earrings, and chains made of 18 to 23 karat purity. Gold coins may also be accepted, but usually only those issued by banks and up to a certain weight limit. Items should be free from stones or embellishments, as only the pure gold content is considered for loan valuation.

Which gold jewellery cannot be accepted for gold loans?

Gold jewellery that is below 18 karats is generally not accepted for gold loans. Additionally, jewellery studded with precious stones, diamonds, or other non-gold materials may be rejected or only the gold portion is considered for valuation. Banks always prefer hallmarked jewellery for accurate assessment and purity verification. Always check with the specific guidelines before applying for a gold loan.

Is 22K or 18K gold eligible for a gold loan?

Yes, both 22K and 18K gold are eligible for a gold loan. However, lenders usually prefer 22K gold, as it has a higher purity and value. The loan amount depends on the gold’s purity and weight. While 18K gold is also accepted by some lenders, the loan-to-value (LTV) ratio may be lower compared to 22K gold. It’s best to check with your lender for specific eligibility criteria.

What is the minimum gold weight required for a gold loan?

The minimum gold weight required for a gold loan usually starts from 10 grams of gold. Some lenders may offer loans for even lower weights, depending on the purity and current market value of the gold. It's best to check with specific financial institutions for their eligibility criteria, as they may have different minimum requirements and valuation methods.

Can I get a gold loan on gold coins or bars?

Yes, you can get a gold loan on gold coins or bars, but it depends on the lender's policies. Most banks and financial institutions accept gold coins issued by banks up to a standard limit. Gold bars may not be accepted by all lenders due to purity and valuation concerns. It’s best to check with the lender about their specific requirements before applying.

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