Find the EMI for a gold loan — a loan you take against gold jewellery or coins.
Uses the standard EMI formula.
Because gold is used as security, these loans often have lower rates and shorter repayment times than loans without security.
EMI: P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1)
A gold loan EMI calculator shows the monthly instalment for a loan taken against gold jewellery or coins that you pledge with a bank or NBFC. It is set up for the short tenures typical of gold loans, up to 36 months, and amounts up to ₹20 lakh.
Gold loans are popular in India because most households hold some gold and the loan is disbursed within hours after the gold is valued. The lender lends a percentage of the gold's value, called the loan-to-value ratio, and returns the ornaments when the loan is closed. Farmers, small traders and salaried families use gold loans to meet short, sharp cash needs.
Many gold loans are offered with other repayment options, such as paying interest monthly and the principal at the end. This calculator covers the EMI option, where each instalment repays both interest and principal.
1. Find the loan amount P, which is at most the eligible value of your gold multiplied by the lender's loan-to-value ratio.
2. Convert the annual rate to a monthly rate r = annual rate ÷ 12 ÷ 100.
3. Set n as the tenure in months, usually 6 to 36.
4. Compute EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1).
5. Multiply the EMI by n and subtract P to get total interest.
6. Compare this with a bullet or interest-only scheme from the same lender to see which suits your cash flow.
The lender tests the purity of your gold, weighs it net of stones, and values it at a reference gold price. It then lends only a share of that value, the loan-to-value ratio, which the regulator caps. The margin protects the lender if gold prices fall. Because the value is set by weight and purity, not by the making charges you paid for the jewellery, the eligible amount is often lower than the price you paid for the ornaments. The EMI you calculate depends on this sanctioned amount, not on the gold's shop price.
In an EMI scheme, principal falls every month, so interest is charged on a shrinking balance. In a bullet scheme, you pay nothing until the end, when principal and all accrued interest are due together, and interest may compound on unpaid interest. In an interest-only scheme, you pay each month's interest and the full principal at the end. For the same rate and period, the EMI route usually costs the least total interest because principal starts falling from the first month. The other routes suit borrowers expecting a lump sum later, such as a harvest.
Because the loan is secured by gold, a default does not just hurt your credit score. After notice, the lender may auction the pledged ornaments to recover the dues. A sharp fall in gold prices can also lead the lender to ask for more gold or a part-payment to restore the margin. Keeping to the EMI schedule, and not borrowing the maximum possible amount, reduces the chance of losing jewellery that may carry family value beyond its price.
Lakshmi pledges her gold bangles to borrow ₹1,50,000 for her shop's festival stock, at 10% a year, and chooses to repay it in 18 monthly EMIs.
Write the formula: EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1)
Convert the annual rate to a monthly rate: r = 10% ÷ 12 ÷ 100 = 0.00833333
Number of instalments: n = 18 months
Substitute your values: EMI = 150000 × 0.008333 × (1+0.008333)^18 ÷ ((1+0.008333)^18 − 1)
Monthly EMI: EMI
Total paid over the full tenure: 9008.56 × 18
Total interest: 162154.12 − 150000
Answer: Gold loan EMI ₹9,009; Total interest ₹12,154; Total payment ₹1,62,154
Expecting a loan equal to the jewellery's purchase price, which included making charges and GST.
Choosing a bullet repayment without realising interest keeps building until the end.
Borrowing at the maximum loan-to-value, leaving no margin if gold prices fall.
Letting the loan run past its due date and risking an auction of the pledged gold.
Meeting urgent medical or education expenses without selling family gold.
Funding working capital for a small shop or farm for a few months.
Comparing a gold loan EMI against a personal loan EMI for the same amount.
Choosing between EMI and bullet repayment offered by the lender.
Why do gold loans have lower rates than personal loans?
Gold is easy to value and easy to sell, so it is safe security for a lender. This lower risk means you get a lower interest rate than a loan with no security.