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 60-80%), 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

Picture 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 10% APR 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% APR because the principal is being paid down each month. Push the LTV up to 90% and the loan amount rises to 9,000; push the rate to 18% and the monthly payment rises by roughly the rate increase divided by twelve, multiplied by the balance.

How the math works

Loan amount = gold value × LTV ÷ 100. Monthly payment = L × r ÷ (1 − (1 + r)⁻ⁿ) where L is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of months. Total interest = monthly payment × months − loan amount. Each step is reproduced in the formula box below. There is no opaque pricing model; the cost figure follows from these four inputs alone.

Where the LTV ranges come from

The 60-80% range commonly cited for gold loans reflects two pressures the lender is balancing. The lower the LTV, the more buffer there is if gold prices fall — the lender doesn't want the collateral to drop below the loan balance. The higher the LTV, the more attractive the product is to the borrower. Lenders publish the LTV they offer, and regulators in some jurisdictions cap it; specific limits vary by country, lender, and gold purity. 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 meaningfully 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. The right comparison is whichever options the borrower can actually access and the time horizon over which the borrowing is needed.

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. Read the loan agreement for the specific fee schedule and margin policy.