How is a Gold Loan Eligibility Amount Calculated?

Gold Loan: The gold jewellery lying in your cupboard or bank locker can help you cover your expenses when you require funds in an emergency. You may bring your gold assets to a gold loan lender and avail a certain percentage of its value as a loan. However, before applying for a gold loan, it’s essential to check how much loan amount you are eligible for. With this information, you may decide how much gold jewellery you need to pledge to get the loan amount you require. 

If you require money to cover your expenses, a gold loan calculator gives you an estimate of its value, helping you to know how much loan amount you can apply for. Below, you will find out how is your gold loan eligibility amount calculated.

Factors Determining Your Gold Loan Eligibility Amount

These are a few factors that lenders use to determine your gold loan eligibility amount:

Loan-to-Value Ratio: Different lenders offer different loan-to-value ratios for gold loans. For instance, Muthoot Fincorp offers up to 80% of the gold value you provide as collateral. The higher the LTV ratio offered by the lender, the higher the loan amount you may avail. So, check your lender’s LTV ratio offer before applying for a gold loan. The lender may offer a lower Muthoot gold loan rate if you borrow less than your gold’s maximum LTV ratio.

Gold Weight: The lenders use their scale to weigh the gold you bring to them and determine the loan amount based on its weight.

Gold Purity: The lenders assess the gold purity, which should be 18 to 24 carats. If your gold has a purity of fewer than 18 carats, they do not accept it as collateral. They also reduce the weight of any stones or gems embedded in your gold jewellery while calculating its value.

Gold Price: After evaluating the gold’s net weight and purity, the lender multiplies it with the current gold rate to calculate its value. Gold rate changes every day, so check the current rate online before approaching a gold loan lender. If you can wait for a few days, let the gold rate go high to get the maximum loan amount.

How to Check Gold Loan Eligibility Amount? 

To check your gold loan eligibility amount, follow the steps mentioned below:

  • Visit the lender’s website.
  • Go to their gold loan section.
  • Click on their gold loan calculator tool.
  • Enter the gold details, including gold’s weight, purity, and current gold price.
  • Know the gold loan amount you may avail.

Who can Avail a Gold Loan?

Any Indian citizen between 21 and 65 years of age can apply for a gold loan. It is a great way to fulfil your financial requirements, but you must check your eligibility before pledging your valuable gold assets. If you consider availing a gold loan, explore the Muthoot gold loan rate offered under different schemes and use an EMI calculator to confirm your repayment capacity. With no end-use restrictions, you are free to use your loan amount for any personal or business purpose.

When it comes to calculating your gold loan eligibility, several factors like your age and gold’s purity play an essential role. A gold loan is a secured loan, the eligibility amount of which depends on the gold assets you pledge. 

Tips to Maximise Gold Loan Eligibility Amount

These are a few tips to get the maximum loan amount on your gold assets:

  • Although lenders accept gold in 18 to 24-carat purity, you get the highest loan amount with higher purity. You may also avail lower Muthoot gold loan rate with high gold purity.
  • Try to choose gold assets with minimum stones and gems. The lenders usually reduce their weight from the total jewellery weight, thereby reducing your loan eligibility amount.
  • Keep an eye on the current gold rates and apply for a loan when the rate is highest.

A gold loan fetches the value from your gold assets, which otherwise might have been lying in your locker. You may pledge your gold to get a gold loan, the amount of which depends on the gold’s value. The purity and weight of the gold are crucial aspects for calculating your loan eligibility amount. Use a gold loan calculator to know how much you can avail and plan your application accordingly.

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