What is the Gold Loan?
A gold loan is secured against jewellery you pledge with the lender. Because the collateral is liquid and held by the bank, approval takes minutes, no credit score is needed, and rates are far lower than personal loans — typically 9–15% at banks, higher at NBFCs.
The RBI caps LTV at 75% of the gold's value for most gold loans. Only the gold content counts — stones, and the making charges you originally paid, are excluded.
Formula & worked example
Value is based on pure gold content, then capped by LTV:
Loan = Gold value × LTV%
Worked example: 50g of 22K gold at ₹9,200/g (24K) → value = 50 × 9,200 × (22/24) = ₹4,21,667. At 75% LTV you can borrow about ₹3,16,250. At 11% over 2 years the EMI is roughly ₹14,750 and interest about ₹37,750.
How to use this gold loan calculator
- Weigh only the gold — deduct stones, kundan and any non-gold weight.
- Enter today's 24K rate; the calculator adjusts for your purity automatically.
- LTV is capped at 75% by the RBI, but many lenders offer less.
- Compare the EMI option against the bullet option, where you repay everything at the end.
Smart tips
- Banks are meaningfully cheaper than gold-loan NBFCs — often 3–6 percentage points lower for the same pledge.
- Choose a shorter tenure. Gold loans are designed for short-term needs, not multi-year borrowing.
- If gold prices fall sharply, lenders can issue a margin call asking you to repay part or pledge more.
- Never miss payments — the lender can auction your jewellery, and sentimental pieces are gone for good.
- A gold loan usually beats a personal loan on rate, and beats selling if you want the jewellery back.
Frequently asked questions
How much loan can I get on 10 grams of gold?
At ₹9,200/g for 24K and 22K purity, 10g is worth about ₹84,333. At the 75% LTV cap that is roughly ₹63,250.
What is the maximum LTV on a gold loan?
The RBI caps it at 75% of the gold value for standard gold loans. Some agricultural gold loans have different rules.
Is a gold loan better than a personal loan?
Usually yes on cost — gold loans run 9–15% versus 11–24% for personal loans, and need no credit score. The trade-off is that your jewellery is at risk if you default.
What happens if I cannot repay?
The lender issues notices and can ultimately auction the pledged gold to recover dues, returning any surplus. Talk to them early — most will restructure rather than auction.
Do making charges count towards the loan value?
No. Only the pure gold content is valued. Stones, design and making charges are excluded entirely.
Want the theory behind the numbers? Read our gold loan guides on the Money Blog.