How Lenders Value Your Gold: Purity, Weight & Rate
By SonaFin Editorial Team · · 5 min read
In short: Lenders value your gold by testing its purity, weighing it, excluding stones and other non-gold parts, and applying the per gram rate for its purity. Higher purity and weight mean a larger eligible loan.
How purity is tested
The lender checks the karat of your gold, commonly 18K, 22K or 24K, using a touchstone or an electronic tester. Purity matters because the lender values your gold against a 22K-equivalent benchmark, so higher-purity gold supports a larger loan.
Weight, stones and deductions
Only the gold content counts. Stones, enamel, wax and other non-gold parts are excluded from the weight used for valuation, so the net weight can be lower than the weight on a jeweller’s bill. Making charges are not part of the value either.
From valuation to loan amount
The lender multiplies the net gold weight, adjusted for purity, by its per gram rate, and then applies its loan-to-value limit. Ask for the valuation breakdown in writing, and ask the lender to test the gold in front of you.
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