Total Valuation of Pledged Gold
₹ 7,20,000
Total Interest Payable
₹ 30,520
Estimated Monthly EMI
₹ 44,210
Maximum Eligible Loan Amount
₹ 5,40,000
About the Gold Loan Calculator
Our free Gold Loan Calculator helps you estimate the maximum loan amount you can secure by pledging your gold jewelry or ornaments. By factoring in gold weight, purity (carats), current market rates, and the Reserve Bank of India (RBI)-prescribed Loan-to-Value (LTV) limits, this tool provides instant clarity on your borrowing capacity.
1. Gold Loan Valuation & EMI Formula
Eligible loan amounts and monthly installment burdens are computed using standard appraisal and amortization formulas:
Total Gold Valuation = Weight (g) × Market Rate per Gram × (Purity Carat / 24)
Maximum Eligible Loan = Total Gold Valuation × (LTV Ratio % / 100)
EMI = [ P × r × (1 + r)n ] / [ (1 + r)n − 1 ]
Where the defined variables are:
- Weight (g): Net weight of pure gold ornaments pledged in grams.
- Purity Carat: Gold fineness ratio (e.g., 22-carat divided by 24 for 91.6% purity).
- LTV Ratio %: Maximum loan-to-value percentage permitted by regulatory guidelines.
- P, r, n: Principal loan amount, monthly periodic interest rate ($r = \text{Annual Rate} \div 12 \div 100$), and tenure in months.
2. Practical Worked Example
Let us review a standard gold financing scenario:
- Gold Weight: 100 grams of 22-carat gold (purity factor = $22 \div 24 \approx 0.91667$)
- Market Rate per Gram: ₹7,200 per gram
- LTV Ratio: 75%
- Interest Rate: 9.5% per annum ($r = 9.5 \div 12 \div 100 \approx 0.0079167$)
- Loan Tenure: 12 months ($n = 12$)
Calculation Breakdown:
- Total Gold Valuation = $100 \text{ g} \times \text{₹}7,200 \times 0.91667 =$ ₹6,60,000 (Note: assuming 24-carat benchmark valuation of ₹7,20,000 for pure gold weight)
- Maximum Eligible Loan Amount (75% LTV) = ₹7,20,000 × 0.75 = ₹5,40,000
- Monthly EMI = ₹5,40,000 × $[0.0079167 \times (1.0079167)^{12}] / [(1.0079167)^{12} - 1] \approx$ ₹47,243 per month
- Total Interest Payable across 12 months $\approx$ ₹26,916
Using pledged gold assets provides immediate liquidity at lower interest rates compared to unsecured personal loans!
3. Frequently Asked Questions (FAQs)
1. Are stones and gems in jewelry included in gold loan weight?
No. Lenders appraise only the net weight of the pure gold. Any embedded stones, gems, or non-gold attachments are weighed and deducted during the evaluation process.
2. What are the repayment options available for a gold loan?
Gold loans offer flexible repayment structures, including regular monthly EMIs, paying only monthly interest with principal at maturity, or bullet repayment where both principal and interest are paid at the end of the tenure.
3. Is my pledged gold safe with the bank or lender?
Yes, banks and certified financial institutions store pledged gold securely in high-security bank vaults equipped with comprehensive insurance coverage against theft, fire, or damage.
4. What is the maximum LTV ratio permitted on gold loans?
Under central bank regulations, banks and NBFCs are typically permitted to offer a maximum Loan-to-Value (LTV) ratio of up to 75% to 80% of the pledged gold's appraised market value.
5. What documents are required to secure a gold loan?
Gold loans require minimal documentation—typically proof of identity (Aadhaar card, PAN card, voter ID) and proof of address, making disbursements extremely fast (often within hours).
6. Do gold loans require a high CIBIL score for approval?
Since gold loans are fully secured by collateral, lenders are generally lenient regarding credit scores, making them accessible even for borrowers with limited credit histories.
7. What happens if I fail to repay the gold loan on maturity?
If the loan is not repaid or renewed upon maturity, the lender provides statutory notices before exercising their legal right to auction the pledged gold to recover outstanding dues.
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