Gold Loan Calculator: Eligibility by Weight and Purity, RBI LTV, EMI and Bullet Interest

How it works

Price at purity = 22K rate × fineness ÷ 0.916 (fineness 0.999, 0.916, 0.833, 0.750) · Gold value = net grams × price · RBI LTV: 85% for loans up to ₹2.5 lakh, 80% above ₹2.5 lakh up to ₹5 lakh, 75% above ₹5 lakh · Maximum loan = highest of min(value × LTV ÷ g, tier cap) over the tiers, where g = 1 + rate × months ÷ 12 for bullet loans (interest counted in LTV) and 1 otherwise · Simple interest = loan × rate × months ÷ 12 · EMI = L × i(1+i)ⁿ ÷ ((1+i)ⁿ − 1), i = rate ÷ 12 · Margin-call fall = 1 − amount owed ÷ (value × LTV)

A gold loan is secured on the gold content of your jewellery. The lender tests purity, deducts stones and other non-gold parts to get the net weight, and values it at a reference price for that purity: under the RBI (Lending Against Gold and Silver Collateral) Directions, 2025, in force for all banks and NBFCs from 1 April 2026, that is the lower of the 30-day average closing price and the previous day's close, published by IBJA or a commodity exchange. The loan-to-value cap now depends on the loan size: 85% up to ₹2.5 lakh, 80% from ₹2.5 lakh to ₹5 lakh and 75% above ₹5 lakh, and it must be maintained for the whole tenure. For a bullet loan, where principal and interest are paid together at the end, the LTV is checked on the total repayable at maturity, so the maximum principal is lower. Bullet loans can run for at most 12 months before renewal. The calculator converts the 22K rate to your purity in proportion to fineness, applies each LTV tier together with your lender's own maximum, and takes the largest loan any tier allows. It then works out the interest (simple interest for bullet and monthly-interest loans, reducing balance for EMI), the processing fee with 18% GST, the effective annual cost including the fee, and how far the gold price could fall before the loan breaches its LTV and the lender asks you to repay part or pledge more gold. Lenders may offer less than the RBI maximum, round down, or charge valuation and other fees, so treat the result as an upper estimate.

Worked example

With the defaults: 40 g of 22K jewellery at ₹12,970/g (fineness 0.916, so the price is ₹12,970/g) is worth ₹5,18,800. The loan is a bullet loan for 12 months at 10.5%, so the amount repayable is principal × 1.105. Tier 1 allows ₹5,18,800 × 0.85 ÷ 1.105 = ₹3,99,077, capped at ₹2,50,000; tier 2 allows ₹5,18,800 × 0.80 ÷ 1.105 = ₹3,75,602, which is within its ₹5 lakh cap; tier 3 (75%) gives ₹3,52,127 but only applies above ₹5 lakh. The maximum loan is therefore ₹3,75,602. Borrowing the ₹2,00,000 you want (85% tier) costs ₹2,00,000 × 10.5% × 12 ÷ 12 = ₹21,000 of interest, repaid with the principal as ₹2,21,000 at maturity, plus a processing fee of 0.5% + GST = ₹1,180: ₹22,180 in total, an effective 11.16% a year. The ₹2,21,000 owed reaches 85% of the gold value if 22K gold falls 49.9%, to about ₹6,500/g. A 14% personal loan for the same ₹2 lakh over 12 months would cost about ₹15,489 in interest (EMI ₹17,957).

Sources: RBI gold and silver loan directions 2025: bullet-loan LTV on total repayable, valuation at lower of 30-day average and previous close, 90% auction reserve (TaxGuru summary) · RBI Directions on lending against gold and silver collateral: LTV 85/80/75%, 12-month bullet tenor, 1 kg ornaments and 50 g coins, release within 7 working days (Conventus Law) · IBJA daily gold rates (999 and 916) · RBI eases LTV for small-ticket gold loans to 85% (Onmanorama, June 2025)

Frequently asked questions