Gold Loan Calculator

A gold loan pledges physical gold (jewellery, coins, or bullion) as security for short-term borrowing. The product is widely used in India, the Middle East, and parts of South-East Asia, where consumer-credit access is uneven and gold is a culturally common store of value. The lender values the gold, advances a percentage of that value as the loan amount, and returns the gold once the loan is repaid. If the loan defaults, the lender auctions the gold to recover the balance.

How to use it

Enter the market value of the gold being pledged, the loan-to-value percentage offered by the lender (commonly 60-75%), the annual interest rate, and the term in months. The calculator returns the loan amount available, the monthly payment under standard amortisation, the total amount paid over the term, and the total interest. The currency selector at the top of the calculator changes formatting throughout; the math itself is currency-neutral.

Worked example

Take 10,000 in gold at 75% LTV, 10% annual interest, and a 12-month term (currency follows the selector). The loan amount available is 10,000 × 75% = 7,500. The standard amortisation formula on 7,500 at a 10% annual rate over 12 months gives a monthly payment of around 659.37 and total interest of around 412.43, about 5.5% of the loan amount over the year, slightly less than the headline 10% rate because the principal is being paid down each month. At 90% LTV the loan amount is 9,000 instead. Raising the rate moves the payment far less than the headline suggests: on terms from six to sixty months, one percentage point adds between about 0.043% and 0.062% of the loan amount to each monthly payment, because the extra interest applies to the average outstanding balance rather than the opening one. On a one-month term, where there is no amortisation to spread it over, the figure is exactly a twelfth of a point at every rate. Over the whole term it adds to total interest in rough proportion to the term: about 0.3% of the loan over six months and 0.56% over twelve, both steady across the rate band, and around 3% over sixty at the 10% rate used above, ranging from about 2.6% to 3.7% across the rates the sliders offer.

How the math works

Loan amount = gold value × LTV ÷ 100. Monthly payment = L × i ÷ (1 − (1 + i)⁻ⁿ) where L is the loan amount, i is the monthly rate (the annual percentage divided by 1,200), and n is the number of months. Total interest = monthly payment × months − loan amount. The cost figure follows from these four inputs alone.

Where the LTV ranges come from

The 60-75% range commonly cited for gold loans reflects two pressures. A lower advance leaves more headroom before the outstanding balance exceeds the collateral value if gold prices fall, and a higher advance releases more cash against the same pledge. Lenders publish the LTV they offer, and some jurisdictions cap it. India's 2025 directions, for instance, replaced a single ceiling with tiered maxima that vary by loan size. Limits elsewhere vary by country, lender, and gold purity rather than following a universal ceiling. Higher carat (purer gold) usually attracts a higher LTV than lower carat or coin gold.

How a gold loan compares to other short-term borrowing

The decision to use a gold loan depends on the alternatives available. Compared with unsecured personal loans, the gold security typically lets the lender offer a lower interest rate; against credit-card cash advances, the rate is usually lower. Compared with a home-equity line or a remortgage, gold loans tend to be faster to arrange but typically cost more over the term. Which comparison applies depends on the options the borrower can actually access and the time horizon over which the money is needed.

Bullet and interest-only structures

Gold loans are frequently quoted as bullet or interest-only structures, where nothing is repaid until the end of the term, and this calculator models the amortising case only. The difference is large: at 10% on a 7,500 loan over 12 months, a bullet structure accrues 750.00 in interest against 412.43 amortising, about 1.8 times the cost, because the full principal stays outstanding for the whole term. A quote that looks cheap per month may be a bullet structure with the principal still to come.

What this calculator doesn't capture

The model assumes a fixed rate, equal monthly payments, and the gold price holding at the value entered. In practice, lenders may charge a one-off processing fee, valuation charge, or storage and insurance fee that the calculator doesn't include; these are usually a small percentage of the loan but raise the effective cost. Some lenders also operate a margin call: if the gold's market value falls below an agreed threshold relative to the outstanding balance, additional gold or partial repayment may be required; the loan agreement is authoritative for the specific fee schedule and margin policy.