What is a Gold Loan? — A Simple Explanation
A gold loan (also called a loan against gold or gehna loan) is a secured loan where you pledge your gold ornaments, jewellery, or coins with a bank or NBFC, and they give you funds immediately — without lengthy paperwork or income proof. Your gold stays with the lender as collateral until you clear the loan.
This makes gold loans one of the fastest ways to get money in India — often disbursed within the same day or within a few hours. They are especially popular among farmers, small business owners, homemakers, and anyone who needs emergency funds without disturbing their savings.
Interest Rate Range (2026)
7.5% – 27%
Banks offer lower rates than NBFCs
Max LTV (small loans)
85%
For loans up to ₹2.5L (RBI 2026)
Typical Tenure
3 – 36 Mo
Flexible, short to medium term
Gold Outstanding (2026)
₹6.5L Cr
Total gold loans in India
✅RBI Update — April 2026: The Reserve Bank of India revised gold loan LTV norms. Loans up to ₹2.5 lakh now enjoy an 85% LTV (up from 75%), loans between ₹2.5L–₹5L get 80% LTV, and loans above ₹5 lakh retain the previous 75% LTV cap. No income proof is required for loans below ₹2.5 lakh under the new rules.
How is a Gold Loan Different from a Personal Loan?
A personal loan is unsecured — the bank takes your word (and credit score) for it. A gold loan is fully secured by the gold you pledge. That is why gold loans have lower interest rates, faster approval, and no need for a good CIBIL score. The trade-off is that if you cannot repay, the lender can auction your gold. You can compare both options using our Personal Loan EMI Calculator and this gold loan tool side by side.
How to Calculate Gold Loan EMI — Formula & Steps
Step 1: Find Your Gold's Market Value
The lender first weighs your gold and checks purity using a karatmeter or fire assay. Then:
Gold Value = Weight (grams) × (24K Rate ÷ 10) × Purity Factor
Example: 20 grams of 22K gold at ₹7,800/gram (24K rate) → Gold Value = 20 × 7,800 × 0.9166 = ₹1,43,000 approx.
Step 2: Apply LTV to Get Max Loan Amount
Max Loan = Gold Value × LTV%
Step 3: Calculate EMI
Use the standard reducing balance EMI formula:
EMI = [P × R × (1+R)^N] ÷ [(1+R)^N – 1]
For bullet repayment (interest only monthly, principal at end): Monthly Payment = P × R, and you repay the full principal P at the end of tenure.
💡 Tip: EMI repayment costs less in total interest because the principal reduces each month. Bullet repayment gives lower monthly cash outgo but more total interest paid. Use the calculator above to compare both instantly.
Gold Rate Per Gram — Loan Amount You Can Get
Based on approximate August 2026 gold rates and RBI 2026 LTV (85% for small loans):
24K Gold per gram (loan)
~₹6,630
at 85% LTV on ₹7,800/g rate
22K Gold per gram (loan)
~₹6,075
at 85% LTV on ₹7,150/g rate
18K Gold per gram (loan)
~₹4,972
at 85% LTV on ₹5,850/g rate
At 75% LTV (large loans)
~₹5,362
22K at 75% LTV for loans above ₹5L
5 Smart Tips Before Taking a Gold Loan
- Compare rates across lenders first. SBI charges 7.5% but may take longer. Muthoot and Manappuram can disburse in 30 minutes but at 12–24%. Use our Bank Loan EMI Calculator to check EMI at different rates.
- Prefer BIS hallmarked 22K jewellery. Hallmarked gold gets faster and more accurate valuation — no disputes on purity. Lenders deduct for un-hallmarked or mixed ornaments.
- Understand the LTV properly. The new RBI 2026 tiered LTV means smaller loans (under ₹2.5 lakh) now get 85% LTV. So you need to pledge less gold for the same loan amount compared to the old 75% rule.
- Ask about prepayment penalties upfront. Under RBI guidelines, prepayment penalties cannot exceed 2% of principal. Many banks offer penalty-free prepayment — always confirm before signing.
- Know what happens in default. The lender will send a notice and may charge 2–4% penal interest. After a waiting period, they can auction your gold. Never pledge gold you cannot risk losing.
For detailed articles on getting the best loan deal, visit our loan guides and articles section or read about Flat Rate vs Reducing Balance — what Indian borrowers must know.
❓ Frequently Asked Questions — Gold Loan EMI Calculator
How much gold loan can I get per gram in 2026?
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As of August 2026, with 22K gold at approximately ₹7,150 per gram and 75% LTV (for loans above ₹5 lakh), you can get around ₹5,362 per gram. With the new RBI 2026 tiered LTV (85% for loans up to ₹2.5 lakh), you may get up to ₹6,078 per gram for smaller loan amounts. Use the "By Gold Weight" tab in our calculator above to get the exact figure for your purity and today's gold rate.
What is the new RBI LTV rule for gold loans from April 2026?
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From
April 1, 2026, RBI replaced the old uniform 75% LTV with a three-tier system:
- Loans up to ₹2.5 lakh — 85% LTV
- Loans ₹2.5 lakh to ₹5 lakh — 80% LTV
- Loans above ₹5 lakh — 75% LTV
Also, no income proof is required for loans below ₹2.5 lakh, and lenders must return pledged gold within 7 working days of full repayment or pay ₹5,000 per day compensation.
What is the gold loan interest rate in India in 2026?
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Gold loan rates in India in 2026 range from 7.5% to 27% per annum depending on the lender. SBI starts at 7.5%, Federal Bank at 8%, HDFC Bank at 9.5%, while Muthoot Finance and Manappuram Finance charge between 12% and 24%. Banks generally offer lower rates. Our calculator has quick buttons to set common bank rates instantly.
Is income proof required for a gold loan in India?
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No income proof is required for most gold loans, and under RBI's 2026 revised guidelines, no credit check is needed for loans below ₹2.5 lakh. Gold loans are purely collateral-based, making them accessible to homemakers, farmers, self-employed individuals, retired persons, and daily wage workers. This is one of the biggest advantages of a gold loan over a personal loan.
Which is better — EMI or bullet repayment for gold loans?
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EMI repayment reduces your outstanding principal every month, so total interest paid is lower overall. Bullet repayment means you pay only interest every month and the full principal at the end — monthly cash outgo is lower, but total interest paid is higher. Choose EMI if you have regular monthly income; choose bullet if you're expecting a lump sum (annual bonus, property sale, harvest proceeds) to repay the principal at end of term. Use our calculator above to compare both options side by side for your loan amount.
What happens to my gold if I cannot repay the loan?
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If you miss payments, the lender will send reminders and may charge a penalty interest of 2–4% per annum on overdue amounts. After issuing a formal notice, the lender has the legal right to auction your pledged gold to recover the outstanding principal and interest. NBFCs can be more aggressive about enforcement due to thinner margins. Always communicate proactively with your lender if you face a cash crunch — most lenders prefer restructuring over auctioning gold.
What gold purity is accepted for gold loans in India?
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Most banks and NBFCs accept 18K, 22K, and 24K gold. The most commonly pledged gold is 22K BIS hallmarked jewellery. Gold coins sold by banks (up to 50 grams per customer) may also be accepted. Gold ETFs, Sovereign Gold Bonds, and digitally held gold are generally not accepted as collateral for gold loans.
How does this gold loan EMI calculator work?
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You can use it in two ways: (1) By Gold Weight — enter your gold's weight and purity, and today's 24K rate. The calculator automatically computes the gold's market value, applies the RBI 2026 tiered LTV to determine your maximum eligible loan, then calculates EMI. (2) By Loan Amount — directly enter your desired loan amount. In both cases, adjust the interest rate and tenure, then click Calculate. Results show your monthly EMI, total interest, total repayment, and a full month-by-month amortization table.
