For a gold loan, lenders in India typically accept gold jewellery between 18K and 22K purity. The purer and heavier the gold you pledge, the higher the loan amount you are likely to get. This is primarily because the entire calculation starts with your gold's assessed value, not your income or credit score.

Understanding gold quality for gold loan is important for you as a borrower as that's what makes gold loans different from almost every other loan product.

Key Highlights

• Lenders typically accept gold jewellery between 18K and 22K purity

• The higher the karat, the higher the assessed value per gram, which directly increases your eligible loan amount

• Stones, diamonds, and non-gold attachments are excluded from the weight and value calculation

• The Loan-to-Value (LTV) ratio determines what percentage of your gold's assessed value you can borrow

• Gold weight calculation is done on net gold weight only, after deducting the weight of any embedded stones or clasps

Gold Valuation Factors: Why Karat Matters More Than You Think

Karat is the unit that tells you how much pure gold is in a piece of jewellery. There is a minimum karat gold required for loan. 24K is pure gold but it's too soft for everyday jewellery, so most ornaments are made with 22K or 18K gold, which means other metals like copper or silver are mixed in to add strength.

Here's why the gold quality for gold loan matters:

A gram of 22K gold is worth more than a gram of 18K gold, because 22K contains more actual gold. So, when a lender assesses your jewellery, they're really calculating how much pure gold is inside it — and the loan amount is based on that figure.

If the current gold rate is ₹7,000 per gram for 24K gold, a gram of 22K jewellery would be valued at roughly ₹6,417 (₹7,000 × 22 ÷ 24). A gram of 18K would come to about ₹5,250. Same weight, different value, and different loan amount.

Which Gold Quality for Gold Loan Is Actually Accepted?

Accepted:

• Gold jewellery between 18K and 22K purity

• Gold coins issued by banks (subject to lender policy)

• Ornaments that include bangles, chains, rings, necklaces, anklets

Not accepted:

• 24K gold in jewellery form (too soft, rarely comes as wearable ornaments)

• Gold bars (remember that policy varies by lender)

• Jewellery with a large proportion of non-gold material

• Items where gold content cannot be verified

Gold Weight Calculation: How Gold Valuation Actually Works

When you walk into a branch to pledge your gold, an in-house appraiser examines it in your presence. The process is straightforward. Here's what they look at:

1. Purity testing:Theappraiser checks the gold's karat using standard techniques — a touchstone test, acid test, or electronic gold tester. This confirms the actual gold content in the ornament.
2. Net gold weight calculation:Your jewellery is weighed on a calibrated scale. Then, the weight of any embedded stones, diamonds, strings, or clasps is subtracted. Whatremains is the net gold weight — and that's what the loan amount is calculated on.

Consider you are a homemaker that brings in a necklace that weighs 30 grams total. After the appraiser subtracts the weight of the beads and the gold clasp's supporting wire, the net gold weight comes to 26.5 grams. That 26.5 grams (at 22K purity) becomes the basis of your gold loan calculation.

1. Current market rate:Lenders use a reference gold price, typically based on the average rate over the last 30 days, to ensure the valuationisn't skewed by a single day's market spike or dip.

How the Loan-to-Value (LTV) Ratio Connects to Gold Quality

Once the gold is assessed, the lender applies a Loan-to-Value (LTV) ratio — the percentage of the gold's assessed value that they'll lend you.

Note: Shriram Gold Loan offers an LTV of up to 80% of your gold's assessed value. Applicable LTV is subject to Shriram Finance's assessment and prevailing Reserve Bank of India (RBI) guidelines.

So if your gold is assessed at ₹1,00,000 and the applicable LTV is 80%, you can borrow up to ₹80,000. Higher purity gold = higher assessed value = higher loan amount at the same LTV ratio.

This is why pledging your better jewellery — not just whatever is handy — can make a real difference to how much you walk away with.

Wrapping up: Understanding Quality of Gold to get Gold Loan

If you have gold jewellery at home and need funds, the next step is simple. Apply online for Shriram Gold Loan and schedule an appointment based on your convenience. Bring your jewellery to your nearest branch. The assessment is done in your presence, is transparent, and takes very little time. You'll know your eligible loan amount before you commit. No income proof. No long approval process. Just your gold, a valid ID, and a clear picture of what you can borrow.

FAQs

Who can apply for a gold loan?

Anyone between 18 and 75 years of age who owns gold jewellery can apply. There's no income proof required and your credit score isn't the deciding factor. Eligibility is based primarily on the gold you pledge as collateral.

What documents are required to apply for a gold loan?

You'll need a valid identity proof (Aadhaar, Voter ID, Passport, or PAN card), address proof, and a recent passport-sized photograph. Documentation is kept minimal, the focus is on the gold assessment, not paperwork.

How long does it take for a gold loan to be sanctioned?

If your documents are in order and the gold assessment is complete, disbursal can happen within a few hours of walking into the branch. There's no lengthy verification process because the loan is secured against physical gold.

Is your gold safe with the lender?

Yes, as long as you're borrowing from a licensed bank or Non-Banking Financial Company (NBFC) regulated by the Reserve Bank of India (RBI). Licensed lenders are required to store pledged gold in secured, insured vaults with surveillance, in line with regulatory guidelines. Shriram Finance stores customer gold in rooms equipped with electronic surveillance and built to government-specified standards.

What is loan foreclosure, and does it cost anything?

Foreclosure means repaying the full outstanding loan amount before the tenure ends, instead of continuing with monthly instalments. Some lenders charge a fee for this. Shriram Gold Loan doesn't as you can foreclose any time after 7 days from disbursal at no extra cost. You pay the principal plus interest accrued up to that date, and your gold is returned to you immediately.

Why opt for a gold loan from Shriram Finance?

Straightforward interest rates, several tenure options, flexible repayment structures, and a branch network that spans across several cities across India. The application process is simple, the gold assessment is done in your presence, and there are no hidden charges to deal with.