During the Covid pandemic, many households lost income sources. Although people had other assets like real estate, immediate liquidity became a big problem. What these households had were a lot of gold. But given the emotional attachment, Indians have to gold, selling their precious gold jewellery was difficult. Although gold loans have been available for a long time, the demand for securing financing against gold articles surged. Future financial emergencies arrive without warning. Be it a medical emergency, a wedding, a child’s education, or short-term working capital for your business- it is always advisable to be prepared.
So, the next time you plan to purchase gold, ask yourself whether the gold could be used for future gold loans or as an investment. Keeping these factors in mind while purchasing gold shall help you make an informed decision. We are aware that gold loans are a credit line extended by the lender against your gold valuables as collateral. The gold loan rate per gram depends on the quality, weight, and purity of gold ornaments, among other gold loan criteria. If attention is not paid to the purity of gold and jewellery hallmarking, it could significantly bring down your gold loan eligibility. So, what factors should be kept in mind, and what mistakes are to be avoided while buying gold with the intent of availing of future gold loans? Let us find out.
Things to Check Before Making a Gold Loan Worthy Gold Purchase
Purity of Gold
Karat is the standard purity rating for gold. A 24kt gold piece is considered 99.9% pure and it descends as you pick 22kt, 18kt, 14kt, etc. The purity of gold plays a crucial role in determining the gold loan rate per gram. The higher the purity of the pledged gold, the higher will be the gold loan per gram rate.
BIS Hallmark
Bureau of Indian Standards (BIS) is the National Standard Body of India that develops and implements standardization procedures, marking, and quality certification of goods. BIS Hallmarked jewellery can get customers more loan amount per gram, unlike gold ornaments without the BIS hallmark. Thus, buying hallmarked jewellery is highly recommended.
Gold Weight
Embedded precious stones in gold jewellery can significantly increase the weight of the ornament. Make sure that you are paying the gold rate on the actual weight of the gold. The precious stones can be weighed separately. The thing to note here is that the gold loan rate per gram is calculated on the actual gold weight without the weight of the stones.
Making Charges
The making charges on hand-made jewellery will be higher than machine-made ones. Do verify if you are paying a higher making charge than required on your gold purchase. Why this is important because if you have paid a higher price for the gold for the same loan value, the effective cost of the gold loan increases. The gold loan company shall calculate the loan amount based on the prevailing gold rates and not on how much you paid for the gold. You should also be aware that GST is levied on gold jewellery.
Jeweller’s Reputation
Established and renowned jewelers often mark their jewellery with their hallmarking logo or abbreviation. This helps the lenders to identify the source and verify the quality of the pledged gold. Since gold also depends upon the quality of the gold articles, purchasing gold from a reputed jeweler is highly advisable.
To get the maximum gold rate per gram, the right kind of gold valuables must be pledged. As per RBI guidelines, a lender can approve a maximum of 75% of the pledged gold’s market value. The Loan to Value (LTV) ratio will also depend on the loan tenure, the form of gold, and a borrower’s repayment capacity. By following these simple guidelines, not only does the gold loan process become easier, but they also ensure that you get a good loan value against your gold.
Muthoot Finance Gold Loan
Availing of a gold loan from Muthoot Finance means competitive gold loan interest rates, a variety of gold loan schemes, easy and flexible repayment options, and much more. Today, Muthoot Finance offers the best gold loan rate per gram, subject to the right gold articles as collateral. So, what are you waiting for? Apply for your gold loan now.
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