"Find out how to calculate gold loan interest. Compare gold loan interest rate in banks & choose the best gold loan interest rate for your needs."
Published: 24 May 2025
Updated: 24 May 2025
Gold is considered a very precious metal in Indian households. It symbolises wealth, prosperity, luck, and tradition. Thus, it plays a great role in important occasions like festivals, weddings, and religious ceremonies. However, apart from holding cultural and sentimental value, it is also used as an asset, offering financial stability to the owners. This makes it a reliable investment through gold loans.
Are you browsing ‘What is gold loan’ on Google? Or are you figuring out how to calculate gold loan interest? Get all your questions answered at My Mudra. Here you will learn what the gold loan interest rate is, how to calculate it, and how gold loan works. Keep reading.
A gold loan is known as one of the most popular and easy sources of financial stability for Indians. It is a secured loan that utilises gold jewellery and other gold ornaments as collateral with the lender. The financial institutions keep the self-owned gold of the applicants to offer them gold loan amounts in return. The loan is determined based on the value of the physical gold in the current market, its purity, and weight. The loan amount offered is generally a percentage of the market value of gold. Once the borrower repays the loan sum on time, the gold is returned to them. One of the best things about gold loans is that they have a quick processing time with minimal documentation and are offered for short to medium durations. It helps the borrower to use the funds attained from gold loans for financial needs such as medical emergencies, business, and other requirements.
If you are struggling with how to calculate gold loan interest, then an EMI Calculator online is the best option out there. It does not require physical assistance or running to the bank to understand your gold loan interest. The EMI Calculator offers a handy and customized solution for applicants to get clarity about their total interest rate and tenure against the type of gold loan plan they want to avail.
Various banks and financial institutions offer this tool and can be accessed by any individual who wants to get the best value for their gold or gold ornaments. Their gold item is kept as security or collateral with the lender until the loan is repaid in full. The calculation gives you an estimate for your EMIs, interest, tenure, and total repayment. You can even try different rates and repayment tenures offered by various leading banks or NBFCs to achieve the best gold loan interest rate option for yourself.
A gold loan interest rate in banks or NBFCs is considerably lower than other financial products, offering great value over time. They mainly range between 8.75% per annum and 24% per annum, depending on the type of financial institution. The loan amount can range between ₹15000 to ₹ 1.5 crore, while the tenure of gold loans is mainly from 3 months to 4 years.
Here are the simple steps that you have to follow to calculate the gold loan interest:
A gold loan calculator can help you gain multiple insights into the gold loan you are about to borrow. Here's how a gold loan calculator can be advantageous:
The gold loan EMI Calculator does not require manual calculations by humans and thus has zero chances of errors and mistakes. Borrowers do not have to worry about how to calculate gold loan interest; the calculator is designed with a simple algorithm for calculation functionality. It gives a precise estimation of the gold loan amount and interest based on the gold's weight, purity, interest rate offered by the bank, and tenure. It avoids any miscalculations that may arise otherwise. Just remember to enter the right numbers and values.
Since the gold interest calculator is fully digital, it gives you real-time updates, making the entire calculation process quick and smooth. It can offer results in seconds, even for complex calculations, without making it tedious for the applicant. This helps you make informed decisions without wasting too much time.
You can enter various gold amounts, interest, and periods to check which lender offers greater stability. It allows multiple entries of different banks or financial institutions, making it easier to compare options. This helps the applicant to understand which bank offers the highest or lowest gold loan interest rate.
The tool gives a clear view of every gold loan detail, from EMIs and total repayment amount to the gold loan interest rate. You are aware of the borrowing cost and a better way, leaving no surprises for hidden charges in the end. Thus, it offers clarity on the loan amount and an understanding of loan eligibility, helping you make confident financial choices.
Before you consider a gold loan from a particular bank, it is important to compare the gold loan requirements and eligibility of different banks in India. It will help you understand which bank gold loan interest rate is low or which plan works for your financial goals. Here is a list of top banks offering their gold loan amount and interest details:
|
Name of the Bank |
Rate of Interest |
Loan Amount |
|
SBI Gold Loan Interest Rate |
9.00% p.a. - 10.25% p.a. |
Rs. 20,000 to Rs. 50 lakh |
|
Canara Bank Gold Loan Interest Rate |
8.75% p.a. |
Rs. 1,00 to Rs. 35 lakh |
|
HDFC Gold Loan Interest Rate |
Contact the bank |
Rs.25,000 onwards |
|
Bank of Baroda Gold Loan Interest Rate |
8.90% p.a |
Up to Rs. 50 lakh |
|
Gold Loan Interest Rate in Indian Bank |
8.75%p.a - 9.90%p.a |
Rs.25,000 onwards |
|
Axis Bank Gold Loan Interest Rate |
17% p.a. onwards |
Rs. 25,001 to Rs. 4 lakh |
Note: The repayment tenure taken in this table is 6 months, and the purity of gold is 22 carat.
The repayment tenure of gold loans is usually for short periods, and they are taken to fulfill emergency requirements such as weddings, education, or medical emergencies.
Today, the price of gold in the market keeps on fluctuating. This affects both your loan amount and its interest. Let's see what the factors are that influence a gold loan interest rate and EMIs.
If the existing gold price in the market is high, the value of gold items pledged by the borrower will also be high. Since there is a lower risk involved, the lender will grant you a lower rate of interest. Therefore, you can get a higher loan amount for the quantity of gold.
The per-gram value of gold is determined by its purity (carat value). This will impact the gold loan calculation when providing monthly EMI sums and repayment value. The higher the purity of gold, the better the loan amount fetched by the borrower.
The economy is experiencing inflation; the value of a currency is bound to depreciate. It leads people to accumulate more gold as it offers stability in this challenging market. Plus, it offers a great opportunity for people to invest at the right time. Hence, if the inflation period lasts too long, the price of gold rises due to the growing demand. At this time, the borrowers are able to get a lower interest rate from the lenders.
Beyond market norms, the gold loan interest rate can also depend on the borrower's mutual relationship with the bank or other lenders. Many lenders provide higher-value gold loans with lower interest rates to their existing customers. Plus, if you already have a good payment history with the financial institution, you will be in a position to negotiate for your gold loan and interest rate.
Gold not only provides financial stability during emergencies but also helps collect funds for bigger investments. So, if you are aiming for a gold loan, first conduct a thorough review of every bank and NFB. Learn how to calculate gold loan interest rate using EMI Calculators to understand how a gold loan will benefit you in the long run. Try out the perks (best interest rate and tenure) offered by different banks through the Gold Loan Calculators and avail yourself of the one that best matches your objectives. Make financial decisions with awareness and transparency!
Ans: Some popular banks offering gold loans include State Bank of India (SBI), HDFC Bank, Axis Bank, and Punjab National Bank. However, the “best” bank depends on factors like interest rates, processing fees, loan amount, and repayment flexibility. Always compare offers before choosing.
💡 Looking for a loan without pledging gold? My Mudra offers fast personal and business loans with minimal paperwork.
Ans: A gold loan is a type of secured loan where you pledge your gold jewellery or coins as collateral to borrow money. The bank or lender keeps the gold until the loan is repaid.
Ans: Gold loan interest rates usually range from 7% to 15% per annum, depending on the lender, the amount of gold pledged, and the borrower's profile. Private lenders may charge slightly higher rates compared to government banks.
Ans: You give your gold (usually jewellery) to a bank or lender, they evaluate its purity and weight, and offer you a loan amount based on the gold’s value — usually up to 75% of its market value. Once you repay the loan with interest, your gold is returned.
Ans: As of now, SBI, Bank of Baroda, and Canara Bank are known to offer comparatively lower interest rates on gold loans, starting from around 7% to 8% per annum. However, rates may change, so it’s best to check with the bank directly.
Ans: It is important to note that different banks offer different gold loan interest rates, which keep changing. They determine the interest based on the per-gram weight of gold. As of 2025, the Canara Bank offers the lowest interest rate on gold loan, which is 8.75% p.a. This interest can be updated anytime by the bank as they will. Therefore, it is advised to keep checking the interest rates of various banks to make a well-informed financial decision.
Ans: You can use a gold loan interest calculator online. Here's the basic formula:
Interest = (Loan Amount × Interest Rate × Loan Tenure in Months) / 1200
For example, if you borrow ₹1,00,000 at 10% interest for 12 months:
₹1,00,000 × 10 × 12 / 1200 = ₹10,000 interest.
Ans: Gold loan interest is based on the purity (carat) and weight of the gold in your ornament. Most lenders accept gold between 18 to 24 carats.
Note: Gemstones or studded stones are not counted in the valuation — only the weight of gold is considered.
Ans: No, your credit score doesn’t affect the interest rate for a gold loan. Since it’s a secured loan backed by gold, lenders mainly look at the value and purity of the gold you’re pledging.
Ans: The minimum amount you can get may be as low as ₹1,000, depending on the lender. The maximum loan amount depends on the current market value of gold and the Loan-to-Value (LTV) ratio — usually up to 75% of the gold’s value.
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