Mistakes To Avoid When Buying Gold That Effects Gold Loan

Gold is regarded as an ‘eternal metal’ oftentimes, it has numerous benefits and plays a crucial role when it comes to financial planning. Due to its timeless value people always like to buy gold for investment also. The demand for gold lies because of its timeless value which makes it a secure and appreciating asset. Incorporating gold into financial portfolios brings diversification which acts as a stabilizing force and reduces overall risk exposure. Avoiding common mistakes while buying gold, it becomes evident is pivotal for a successful and financially safe journey.

You can also use your valuable gold asset to get loans against it in need. But not every gold asset is usable to avail loans. According to the RBI, there are certain guidelines and rules for gold items to pledge. Only certified ornaments that meet purity standards can be pledged to avail of gold loans.

The purity of gold directly influences the terms and conditions of gold loans, impacting the gold loan interest rates and per-gram rate. When it comes to using gold for loans, knowing its purity is very important, especially with the fluctuating nature of gold rates. When contemplating using gold as collateral for loans, paying attention to the gold carat rate is crucial. The per-gram rate of gold plays a significant role in determining the loan amount, making it pivotal to understand how this factor can impact your financial decisions.

Understanding Gold Purity And Quality 

There are some government and goldsmith standards that you should know about gold purity. Whether you are buying gold for investment or for wearing purposes, it is always important to consider purity standards. Gold purity is a critical factor influencing its value, especially when it comes to obtaining loans. It’s essential to comprehend the significance of purity levels, as they directly correlate with the gold loan rate per gram.

Below Are The Factors That Help To Understand Gold Purity

Gold Karat:

Karat indicates the purity of gold in gold jewelry, the finest type of gold is 24 karats or 999 gold. A lower karat indicates a lower purity level. In contrast, 14-karat gold is 58.5% pure, while 18-karat gold is 75% pure. Most wearable gold ornaments are made of 22 Karats (916) gold.

BIS Hallmarking: 

BIS hallmarking is a quality assurance mark set by the government in India. Only govt agencies can mark the BIS hallmark after inspection. To ensure the purity and authenticity of gold jewelry, search for BIS hallmarks on it. The BIS hallmark is well-known in India and guarantees that the gold satisfies domestic requirements. For E.g. 916 indicates 22 Karat gold while 999 indicates 24 karat pure gold. From April 2023 Indian government has issued a 6-digit unique code for all certified gold ornaments. 

Color and Appearance: 

Pure gold is a vivid yellow with a noticeable sheen. However, when other metals are included, gold alloys with lesser purity levels could seem paler or have a different tint. There are different types of gold e.g. Rose gold which is in pink/rose color. The rose gold is made of 18K gold.

Certification and Stamping: 

Real gold jewelry is often certified and stamped with markings indicating the amount of purity and karat. Additionally, the purity and authenticity of the gold are guaranteed by certification from government institutions.

Factors to check while buying a gold jewelry

1. Purity and Certification: 

   As mentioned above, verify that gold jewelry has a purity hallmark, has been verified by a government agency such as the BIS, and examines its karat to ascertain the degree of purity.

2. Weight: 

   While buying gold items, always carefully check the gold weight. Many ornaments come with gemstones added, make sure you are not paying for those gemstones. Consider gold and gemstone weight separately.

3. Price:

   When you buy a gold item, check gold rates in your region. You can check government gold rates state-wise here. Also, check for jewelry-making charges to avoid extra pay.

The Impact of Gold Quality on Loans Application

Gold purity directly affects a gold loan application. A lender tests and identifies your precious gold items while processing your loan application. By outlining the mistakes you can easily get the maximum loan value against your gold assets.

Neglecting Purity Checks

Purchasing impure or alloyed gold poses significant risks, especially when it comes to obtaining a loan against gold. Failing to ensure the purity of gold can lead to adverse consequences, affecting loan eligibility, gold loan rate, and loan-to-value ratios. Lenders often assess the purity of gold to determine its gold carat rate, and acquiring gold without proper purity verification may result in a lower gold loan rate than expected.

Impact on Loan Eligibility

The purity of gold directly influences loan eligibility. As mentioned earlier, according to the RBI  only 18k to 24k gold items can be pledged to get a loan. Lenders prefer pure gold as collateral because of its higher market value and liquidity. If you have impure or alloyed mixed gold jewelry, the lender may reject your loan application.

Loan-to-Value Ratios

Loan-to-value (LTV) ratios indicate the percentage of gold loan rate per gram compared to the per gram rate of gold. Higher purity levels generally result in more favorable LTV ratios, providing borrowers with better loan terms. For example, if you are pledged 24K gold you will get a high per gram rate and LTV compared to 22k & 20K gold jewelry.

Understanding Market Trends

Staying informed involves actively tracking changes in gold rate per gram, market demand, and geopolitical factors. Regularly check financial news, follow reputable market analysts, and utilize online resources that provide real-time updates on gold loan rates per gram and trends.

Tips for Buying Gold Jewelry 

When you buy gold jewelry in India, you must navigate through certain key points to ensure that your gold assets are valuable and reliable. Here are a few factors to check when you purchase any gold item.

1. Buy Pure Gold Jewels Only 

   Gold’s value depends on its purity, impure and mixed metal gold can affect your asset value. So, always buy 24k to 18k gold, and avoid below 18k gold jewelry, impure, or alloyed gold. 

2. Check Hallmarks

   Always check for BIS and manufacture hallmarks on gold items to ensure purity and authenticity.

3. Avoid Peak Rates

   Buying gold during price peaks can significantly impact the overall gold rate per gram. Making purchases when gold prices are high includes potential financial setbacks.

4. Make Opportune Moments Purchase

   Identify opportune moments when gold prices are comparatively lower. It potentially provides cost savings and enhances the overall value of the investment. 

Why SahiBandhu for Gold Loans?

In the world of loans against gold, where precision and efficiency matter, it’s crucial to align with trusted partners. SahiBandhu Gold Loans emerges as India’s most trusted loan service provider against gold assets. We offer a seamless experience without the burden of lengthy documentation processes. With our phygital and customer-first we have achieved quick application approval and instant loan disbursement with zero paperwork. 

1. Less Documentation: Gold loans are simple to apply for and don’t need a lot of paperwork, they are a popular choice for funding among entrepreneurs. In contrast to conventional loans, a gold loan just needs a small amount of KYC papers, including a PAN card and an Aadhaar card.
2. No Credit Score Required: Since gold loans are secure loans where your valuable gold works as collateral, you don’t require a minimum credit score to apply.
3. Lower  Interest Rates: The interest rates on gold loans are often competitively lower than other types of loans. Which makes them acceptable, and one of their main benefits. Furthermore, gold loans frequently have no additional costs, which sets them apart from other loan kinds and may make them a more transparent choice for you.
4. Instant Loan Disbursement: At SahiBandhu we prefer user conveniences. Once your loan against gold is approved, your loan amount is deposited in your bank account within 30* mins.
5. Easy Repayments: Paying a loan back is more headache. To improve our customer experience and make repayments easy we have customized and flexible repayment plans for your gold loans. 
6. Multiple Banks: We have multiple banks including HDFC, Axis ICICI, etc associated with us to provide the best gold loans. You can select your favorite bank gold loan. 

The end lines

Gold the yellow metal is not only for wear or investment, but it also works as a financial tool in times of need. You can easily finance your gold when you need instant money without any hassle. If you already have taken a gold loan and are looking to refinance or transfer your loans, check offers with SahiBandhu to avail more benefits.