Learn why gold purity plays a crucial role in gold loan approval and loan amount.

When you're in urgent need of funds, a gold loan is one of the fastest and most reliable options available. But before you walk into a branch with your ornaments, it's crucial to understand one important factor that can make or break your loan deal  gold purity. 

In this blog, we'll explore the importance of gold purity, how it affects the loan amount, and why understanding the gold karat value can help you get the best deal. 

 

What Is Gold Purity? 

Gold purity refers to the percentage of pure gold present in an item. It’s commonly measured in karats: 

• 24K gold is 99.9% pure 

• 22K gold is about 91.6% pure 

• 18K gold contains 75% pure gold 

Most jewellery in India is made of 22K gold, while coins are often 24K. This distinction is vital because lenders use gold karat value to assess how much your gold is worth before offering a loan. 

 

Importance of Gold Purity in Gold Loans 

The importance of gold purity can't be overstated when it comes to getting a gold loan. Lenders don’t just weigh your gold; they also test its purity to determine its actual market value. 

• Higher purity = higher market value = higher loan amount 

• Lower purity = lower per gram value = reduced loan eligibility 

This simple logic explains how gold purity affects loan approvals and disbursement amounts. If your gold is impure or mixed with other metals, the lender may offer a much smaller amount than expected—or reject your application. 

 

How Gold Purity Affects Loan Amount and LTV Ratio 

Your gold’s purity directly influences the loan-to-value (LTV) ratio, which is the percentage of the gold’s value that the lender will provide as a loan. 

For instance, if you have 10 grams of 24K gold and the gold loan rate per gram by purity is ₹5,800, your maximum loan amount (at 75% LTV) could be around ₹43,500. But for 18K gold, the rate per gram might be significantly lower, which means less money in your hand. 

This is a clear example of how gold purity affects loan calculations and why you should always be aware of the gold karat value of your assets. 

 

22K vs 24K Gold Loan: Which One Gets You More? 

Many people wonder which is better for a gold loan: 22K or 24K gold. 

• 22K gold is widely accepted because most jewellery is made in this purity 

• 24K gold, usually in the form of coins, is purer and fetches a higher rate per gram 

However, not all lenders accept 24K gold coins. It's best to check with your lender in advance. When it comes to 22K vs 24K gold loan approval, lenders typically prefer jewellery (22K) due to its wider acceptance and resale value, even though 24K offers a higher theoretical value. 

 

The Loan Against Gold Purity Check Process 

Before approving a loan, every lender conducts a loan against gold purity check using advanced techniques like XRF (X-ray fluorescence) machines. This step is essential to: 

• Confirm the actual karat value 

• Detect any mixing of metals 

• Avoid fraud and ensure fair loan amounts 

This check plays a major role in how gold purity affects loan approvals. The purer your gold, the smoother and faster the process. 

 

Gold Loan Rate Per Gram by Purity 

The gold loan rate per gram by purity fluctuates based on daily gold prices and the karat value of your gold. Here's a simplified breakdown (illustrative only): 

Purity	Approx. Rate/Gram	LTV @ 75%	Estimated Loan/Gram
24K	₹5,800	75%	₹4,350
22K	₹5,300	75%	₹3,975
18K	₹4,200	75%	₹3,150

This table shows again how gold purity affects loan disbursement. Even a small drop in purity can impact the total amount you receive. 

 

Why Purity Should Be Your Priority 

Understanding the importance of gold purity is key to getting the most value out of your gold loan. From loan amount to interest rates and eligibility, how gold purity affects loan terms is something every borrower should know. 

Whether it’s choosing between 22K vs 24K gold loan options, or preparing for a loan against gold purity check, being informed gives you the power to make smarter decisions. 

 

Ready to Apply? 

Make sure your gold is hallmarked and tested professionally. At Kosamattam Finance , we offer instant gold evaluation and same-day loan disbursal based on the highest gold loan rate per gram by purity. 

Apply now and unlock the real value of your gold!