Formula used
Gold value = weight x 24K price per gram x (karat / 24). Eligible loan = gold value x LTV%. EMI on the eligible amount uses the standard reducing-balance formula over the chosen tenure.
Example calculation
50 grams of 22K gold at Rs 7,200 per gram (24K) is worth about Rs 3,30,000. At 75% LTV, the eligible loan is about Rs 2,47,500. At 9.5% for 12 months, EMI is about Rs 21,700 and total interest about Rs 12,900.
How to use this calculator
- Enter the net weight of gold you plan to pledge, in grams.
- Select the purity in karat; most Indian jewellery is 22K.
- Enter the current 24K gold price per gram.
- Set the LTV your lender offers, up to the 75% RBI cap.
- Enter the interest rate and tenure to see EMI and total interest.
Important assumptions
- Gold is valued purely by weight x price x karat/24; making charges, stones and non-gold parts are excluded.
- The EMI repayment structure is modelled; bullet or interest-only schemes differ.
- Educational estimate only. Lender valuation, reference price and scheme rules decide the actual offer.
Common mistakes to avoid
- Using the 22K market price with the karat factor applied again, undervaluing the gold.
- Including stone weight in the gold weight.
- Assuming all lenders offer the full 75% LTV.
- Ignoring processing and valuation fees in the total cost.
- Taking bullet-repayment schemes without comparing total interest against EMI schemes.
How gold loans work in India
A gold loan is secured credit against pledged gold jewellery or coins. Because the lender holds collateral, approval is fast and credit-score requirements are lighter than personal loans, and rates are usually lower. The gold stays in the lender's custody until the loan is closed.
- Secured loan: gold is pledged and stored by the lender.
- Faster approval and lighter credit checks than unsecured loans.
- RBI caps the loan at 75% of assessed gold value.
Gold valuation: weight, purity and reference price
Lenders weigh only the gold content — stones and attachments are excluded — and apply a purity factor of karat/24. The price used is the lender's reference rate, commonly an average of recent days, not necessarily today's headline price. That is why two lenders can quote different per-gram loan amounts on the same jewellery.
Gold loan vs personal loan
For borrowers who own gold, a gold loan is often cheaper and faster than a personal loan, but it puts the gold at risk and suits shorter tenures. A personal loan needs no collateral but depends heavily on income and credit score.
- Gold loan: lower rate, short tenure, collateral at risk.
- Personal loan: no collateral, higher rate, income-dependent eligibility.
- Compare total interest for your amount and tenure before choosing.
Source and Methodology
This calculator estimates gold value from weight, purity and the 24K price you enter, applies your chosen LTV within the RBI cap, and computes EMI with the standard reducing-balance formula. It does not fetch live gold prices or lender rates and is for educational planning only.
Related calculators and guides
You can cross-check this estimate using: salary in-hand calculator, Old vs New Tax Regime Calculator, 80C deduction calculator, EMI calculator, ITR-2 filing guide, emergency fund guide.
When this tool is useful
- When you want a fast estimate before making a financial or salary decision.
- When you want to compare different assumptions in seconds.
- When you want to understand the formula behind the result.