How the Gold Loan EMI Calculator Works
A gold loan is secured against your jewellery, so lenders approve it quickly and charge less than they would on an unsecured personal loan — typically 9% to 20% a year, though some NBFCs go higher.
Lenders sanction a percentage of your gold's market value, called the loan-to-value ratio. The RBI caps this, so the amount you can borrow depends on the weight and purity of the gold you pledge, not on your income or credit score.
Enter the sanctioned loan amount, the interest rate and the tenure. Tenures are usually 3 to 24 months, which is why this calculator accepts fractions of a year.
The result shows your EMI on a standard reducing-balance basis, along with the total interest over the term.
Formula Used
Gold loan EMI uses the standard reducing-balance formula:
EMI = P × r × (1+r)^n / ((1+r)^n − 1)- PGold loan principal amount sanctioned
- rMonthly interest rate (annual rate ÷ 12 ÷ 100)
- nTotal number of monthly instalments (tenure in years × 12)
Example Calculation
Suppose you take a gold loan of 2,00,000 for 1 year at a 12% annual interest rate.
- Gold Loan Amount200,000
- Interest Rate12% p.a.
- Tenure1 year
- ResultMonthly EMI ≈ 17,770 (Total Interest: ≈ 13,237)
Important Assumptions
- This calculator assumes an EMI-based gold loan, where every instalment repays both interest and principal.
- Many gold loans instead use a bullet repayment structure — you pay only interest monthly (or nothing at all) and repay the entire principal at the end. Those schemes will not match this calculator; check which structure your lender is offering.
- Interest is calculated on a reducing monthly balance at a fixed rate for the full tenure.
- Processing fees, valuation charges, and any penalty for late payment are not included.
- The calculator does not estimate how much you can borrow against a given weight of gold, since that depends on the lender's loan-to-value ratio and the prevailing gold price.