How To Calculate Gold Loan Per Gram?

10 Oct 2024|

1 min read |

by ICICI Securities Team

In one of the previous blogs, we covered how to use an online gold loan calculator. You may want to know what to learn to calculate gold loan per gram, so here we are sharing all the details.

Factors that decide gold loan per gram value

Here are the factors you need to consider:

Gold Price per Gram: The gold price varies daily based on market conditions, purity, and location. The value can be different in Mumbai and Delhi on the same day. You can check the current market price for gold (22K or 24K) from trusted sources.
Gold Purity: Banks/NBFCs consider the purity of gold while sanctioning a loan. For gold jewelry, they often take into account 22K, but if the gold is of a lower or higher purity, the loan amount will vary accordingly.
Loan-to-Value (LTV) Ratio: You can read about LTV in detail HERE. The RBI has capped the LTV ratio for gold loans at 75%, meaning that you can get a loan of up to 75% of the gold’s market value.

Loan Per Gram Formula

You can use the below formula to calculate the loan amount per gram:

Loan Amount Per Gram: Price of Gold per Gram × Purity Factor × LTV Ratio

Let us assume the below details:

The current price of 22K gold is Rs 7,000 per gram.
Purity Factor: If the gold is 22K (91.6%), the purity factor would be 0.916.
LTV Ratio: If the LTV is capped at 75% by the lender, the LTV factor is 0.75.

Now, applying these values, the loan amount per gram comes as - 7000 * 0.916 * 0.75 = Rs 4809

With the above information, you can now calculate the loan amount for the gold quantity you have.

Disclaimer

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