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When on a special occasion or in an emergency you have to fulfill some financial responsibility and you do not have sufficient funds, then a gold loan can be an immediate resource at such a time. It is worth noting that the amount of gold loan you will get depends to a large extent on the purity of the gold. The higher the purity, the higher the amount you can take as a loan, if the purity is less then the loan amount will also be less. Let us understand the effect of the purity of gold on gold loans here.
Meaning of purity of gold
The purity of gold is measured in carats. It is represented by K. 24K gold is the purest gold, containing 99.9% gold. The higher the purity of gold, the softer or more fragile the gold jewelry made from it will be. This is why other metals are added to gold to improve its strength and durability.
24 karat (24K): 99.9% pure gold, rarely used in jewelry.
22 karat (22K): 91.6% pure gold, used in high-end jewellery.
18 karat (18K): 75% pure gold, often used in jewelry with intricate designs.
14 karat (14K): 58.3% pure gold, used in less expensive jewelry.
Gold loan and purity of gold
The higher the purity of gold i.e. gold carat, the higher its market value. This affects the loan amount you get per gram. That is, more purity means more price. Since 24K gold is the purest, its price per gram in the market is the highest. Due to this, the highest loan amount per gram is available in gold loan against 24K gold. Due to the slightly lower purity of 22K gold, it can provide a slightly lower loan amount than 24K gold. This applies to 18K and 14K gold.
Keep this in mind while applying.
To get the best gold loan, you will have to make some effort. According to ICICI Direct, to maximize your loan amount, pledge high-quality gold (22K or 24K) if possible. Be aware of the assaying process used by the institution offering the gold loan and how it affects the valuation of your gold. Comparing multiple lenders can help you get the best deal.
