Understanding the minimum gold weight needed for a Gold Loan

Gold Loans have become an increasingly popular financial product. They provide a quick and easy way to secure funds by leveraging your gold assets. If you are considering taking out a Gold Loan, one of the primary questions you might have is, 'What is the minimum weight needed for a Gold Loan?'

What is a Gold Loan?

A Gold Loan is a secured loan where you pledge your gold jewellery or coins as collateral with a lender. This type of loan is favoured for its relatively low interest rate, quick disbursement process and minimal documentation requirements compared to other types of loans. The loan amount you receive is based on the value and weight of the gold you pledge.

Axis Bank offers attractive Gold Loans starting from as low as ₹25,001 with competitive interest rates and minimal documentation requirements. You will also earn 150 Axis eDGE reward points, which you can redeem as per your choice, upon the loan disbursal.

Factors influencing the minimum weight of gold for a Gold Loan

1. Purity of gold: The purity of your gold significantly impacts the loan amount. Higher-purity gold (22K or 24K) may potentially fetch a higher loan amount per gram.

2. Market value: The prevailing market value of gold plays a crucial role. Lenders usually offer a percentage of the current market value, typically ranging from 70% to 90%.

3. Gold Loan eligibility: Gold Loan eligibility criteria are relatively straightforward:

Age: You should be between 18 and 70 years of age
Ownership: You must own the gold you intend to pledge
Purity: Generally, the gold should be of 18K purity or higher

4. Documents required: The documentation for Gold Loans is minimal and includes:

Identity proof: Passport, Aadhaar card, PAN card or driving license
Address proof: Utility bills, ration card or lease agreement
Photographs: Passport-size photographs
Proof of ownership: Proof that you own the gold being pledged (jewellery bills, etc).

How much gold weight is needed for a Gold Loan?

Consider this example:

Assuming the prevailing market price of gold is ₹5,000 per gram, and your bank offers 75% of the value as a loan, for 10 grams of gold:

The total value of gold = 10 grams x ₹5,000 = ₹50,000
The loan amount = 75% of ₹50,000 = ₹37,500

Therefore, pledging 10 grams of gold would typically yield a loan amount of approximately ₹37,500, subject to the bank's assessment and policies.

Generally, the minimum weight needed for a Gold Loan is around 10 grams. This is because smaller quantities might not yield enough loan amounts to justify the processing and handling costs.

Also Read: What is the maximum tenure of a Gold Loan?

Conclusion

Understanding the minimum weight needed for a Gold Loan and the associated requirements can help streamline the process of a Gold Loan and set realistic expectations. With a lower limit of around 10 grams, you can calculate the potential loan amount based on the current market value and the lender’s policies.

Gold Loans are a convenient and quick financial solution, especially in times of emergency. By knowing the eligibility criteria, the minimum weight requirements and the documents needed, you can make a wise decision and leverage your gold assets efficiently.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision