Key Takeaway
Gold loans offer the lowest interest rates (7–12%) among secured loans in India because gold is highly liquid collateral. LTV (Loan to Value) is capped at 75% by RBI , meaning ₹10 lakh gold gets you max ₹7.5 lakh.
Gold Loan Valuation Summary:
- Estimated gold jewelry market value: ₹3,30,000.
- Maximum eligible loan amount (75% LTV): ₹2,47,500.
- Monthly interest payments (simple interest): ₹1,959/month.
- Total interest payable over 12 months: ₹23,512.
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Frequently Asked Questions
What is LTV in gold loans?
LTV stands for Loan-to-Value. The Reserve Bank of India (RBI) restricts gold loan LTV to a maximum of 75%, meaning you can borrow up to 75% of your pledged gold's market value.
How is gold loan interest calculated?
Unlike EMIs, gold loans often offer flexible repayment options like bullet repayments (principal + simple interest paid at the end of tenure) or monthly interest-only payments.
What happens if I fail to repay a gold loan?
If you default on payments, the lender has the legal right to auction your pledged gold jewelry to recover the outstanding loan balance and accumulated interest.
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