Gold can help unlock funds without being sold, but the practical question for many borrowers is simpler: how much gold do I need for the loan amount I want?
The answer depends on more than weight alone. Gold purity, eligible net weight, the applicable valuation rate and Loan-to-Value (LTV) limit all influence how much may be available against the pledged gold.
The Bajaj Finance Gold Loan Calculator can help answer this question with an indicative estimate. It helps borrowers understand how gold weight, purity, gold value and the applicable Loan-to-Value (LTV) limit can affect the loan amount they may be eligible for.
How does the Bajaj Finance Gold Loan Calculator work?
The Bajaj Finance Gold Loan Calculator is an online planning tool. It helps estimate how much a borrower may be able to borrow against eligible gold.
A borrower can enter details such as the required loan amount, gold weight and purity, depending on the calculator format. The tool then gives an estimate based on the applicable gold valuation and LTV limits.
This can help borrowers decide how much gold they may need to pledge before applying for a gold loan.
However, the calculator gives an estimate. The final loan amount is decided after the lender physically checks the actual purity and net weight of the gold and applies the applicable valuation and eligibility rules.
How much gold is needed for a specific loan amount?
The amount of gold required depends mainly on four things:
- The loan amount the borrower wants
- The purity of the gold
- The net weight of eligible gold
- The applicable gold valuation and LTV limit
For example, a borrower looking for a smaller loan may need less gold than someone looking for a larger loan. Similarly, higher-purity gold may have a higher assessed value for the same weight because it contains more pure gold.
This means there is no single fixed number of grams needed for a particular loan amount.
The Bajaj Finance Gold Loan Calculator helps borrowers get an indicative estimate based on these factors.
How does gold purity affect the loan amount?
Gold purity shows how much pure gold is present in the pledged asset. Higher purity generally means more pure gold content for the same weight.
For a Bajaj Finance Gold Loan, eligible jewellery and ornaments are between 18K and 22K purity. Eligible gold coins can be up to 24K purity, subject to applicable terms.
The calculator can help borrowers compare how the estimated loan amount changes when the gold weight or purity changes.
How is the value of gold calculated?
The loan amount is not based simply on the retail price of jewellery. During valuation, the lender considers the value of the eligible gold content. Stones, gems and other embellishments are not included in the assessed gold value.
For valuation, Bajaj Finance considers the lower of the previous day’s closing price or the 30-day average closing price for the relevant purity, as published by IBJA or a SEBI-regulated commodity exchange. The actual purity and net gold weight are also considered.
This means two jewellery pieces with the same overall weight may have different assessed values if their purity or eligible gold content is different.
How does the RBI’s LTV limit affect the loan amount?
The Loan-to-Value (LTV) limit sets the maximum amount that can be borrowed against the assessed value of eligible gold.
For consumption loans, the applicable maximum LTV is:
- Loans up to Rs. 2.5 lakh: up to 85%
- Loans above Rs. 2.5 lakh and up to Rs. 5 lakh: up to 80%
- Loans above Rs. 5 lakh and up to Rs. 2 crore: up to 75%
For example, if eligible gold is assessed at Rs. 2 lakh, an LTV of 85% would allow a maximum eligible loan amount of Rs. 1.7 lakh, subject to applicable eligibility and loan terms.
Therefore, a borrower looking for Rs. 1.7 lakh cannot assume that any 10 grams of gold will be enough. The required weight depends on the purity, assessed gold value and applicable LTV.
What does the Bajaj Finance Gold Loan offer?
Bajaj Finance offers gold loans from Rs. 5,000 to Rs. 2 crore against eligible gold, subject to eligibility and applicable terms.
Borrowers can pledge eligible gold jewellery, ornaments or gold coins instead of selling them. The gold is assessed for purity and weight before the final loan amount is determined.
The applicable interest rate ranges from 9.50% to 24.25% per annum. Loans above Rs. 2.5 lakh are subject to credit checks.
Borrowers can also choose the repayment structure applicable to their loan. Under bullet repayment, both the principal and interest due are paid at maturity. Under regular repayment, interest is paid at half-yearly intervals as per the repayment schedule, while the principal is paid at maturity.
Why use a gold loan calculator before applying?
A calculator can help borrowers plan their borrowing before pledging their gold.
It can help them:
- Estimate the gold needed for a loan amount
- Compare different gold weights and purity levels
- Understand their possible borrowing capacity
- Plan the amount they actually need
- Review repayment requirements before applying
This can help borrowers avoid pledging more gold than they may need for their financial requirement.
What should borrowers remember?
The Bajaj Finance Gold Loan Calculator is a planning tool, not a guarantee of the final loan amount.
The final amount depends on the physical assessment of the pledged gold, its actual purity and net weight, the applicable gold valuation, LTV limit, credit checks where applicable, and other eligibility requirements.
Borrowers should also consider the interest rate, tenure, repayment structure and applicable charges before taking a loan.
A simple calculator estimate can therefore be the first step. Understanding how gold is valued and how LTV works can help borrowers make a more informed borrowing decision.
*T&C apply.
About Bajaj Finance Limited
Bajaj Finance Ltd. (‘BFL’, ‘Bajaj Finance’, or ‘the Company’), a subsidiary of Bajaj Finserv Ltd., is a deposit-taking Non-Banking Financial Company (NBFC-D) registered with the Reserve Bank of India (RBI) and is classified as an NBFC-Investment and Credit Company (NBFC-ICC). BFL is engaged in the business of lending and acceptance of deposits. It has a diversified lending portfolio across retail, SMEs, and commercial customers with significant presence in both urban and rural India. It accepts public and corporate deposits and offers a variety of financial services products to its customers. BFL, a thirty-five-year-old enterprise, has now become a leading player in the NBFC sector in India and on a consolidated basis, it has a franchise of 69.14 million customers. BFL has the highest domestic credit rating of AAA/Stable for long-term borrowing, A1+ for short-term borrowing, and CRISIL AAA/Stable & [ICRA]AAA(Stable) for its FD program. It has a long-term issuer credit rating of BB+/Positive and a short-term rating of B by S&P Global Ratings.
For more information, visit www.bajajfinserv.in
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