A Gold Loan calculator helps calculate the loan amount you can receive against your gold assets, e.g., gold jewellery, bank-issued gold coins, gold bars, etc. It does this by assessing the value of your gold based on its weight, purity, and the current market price. A Gold Loan calculator also considers the lender’s loan-to-value (LTV) ratio. In this blog, we will understand in detail how a Gold Loan calculator works and why you must use it for better financial planning before taking a loan against your gold.
What is a Gold Loan Calculator?
A Gold Loan calculator is an online tool showing the Gold Loan amount that one can receive against the gold ornaments or coins pledged. Within seconds, you can estimate the approximate total loan amount by entering a few simple details.
Gold Loan calculators utilise information such as the gold purity, net gold weight, current gold price, and the lender's Loan-to-Value (LTV) ratio to determine the loan amount. Depending on these details, the approximate final loan amount is estimated and displayed. With a handy online Gold Loan calculator, you can avoid confusion, reduce financial strain, and plan finances effectively in advance.
How Does a Gold Loan Calculator Work?
The Gold Loan amount is calculated based on a standard principle. The Gold Loan calculator takes the value of the pledged gold, applies the lender’s LTV ratio, and instantly estimates the eligible loan amount. Here are the steps involved in the calculation process:
1. Input the Gold Purity
The purity of gold is measured in karats. As the first step, enter the karat value of the gold. For jewellery, it is usually 18K or 22K. The higher the purity, the higher the value. The online Gold Loan calculator uses this data to estimate the current gold price.
2. Enter the Gold Weight
The second step is to enter the net weight of the gold jewellery. It's important to exclude the weight of stones and non-gold elements in the jewellery.
3. Market Value of Gold is Applied
Several economic factors cause regular fluctuations in the price of gold. The online tool automatically inserts the current market gold rate for the correct calculation.
4. LTV Ratio is Applied
RBI allows lenders to offer up to 75% of the gold value as a loan amount. This is known as the Loan-to-Value (LTV) ratio. The calculator simply multiplies the gold value by this ratio to estimate the Gold Loan amount.
For example, if the value of gold is ₹1,00,000, the estimated loan amount at a 75% LTV ratio would be ₹75,000
5. Estimated Gold Loan Amount is Displayed
With all this data, the Gold Loan calculator estimates the eligible loan amount and displays the final amount on the screen.
6. Gold Loan Interest/EMI Calculation
You can use a Gold Loan EMI calculator to determine your monthly payback after you have determined the eligible loan amount. Just input your desired repayment period, the projected loan amount, and the lender's interest rate. The monthly instalment and total interest due will be displayed by the EMI calculator.
This helps borrowers in making better financial plans and selecting a repayment schedule based on their financial capacity.
Example of a Gold Loan Calculation
Let's walk through an example for better understanding. Assume a person wants a Gold Loan and meets the eligibility criteria. The purity of the gold jewellery is 22K, and the gold weight is 30 grams. Assume the gold price per gram is ₹5,500, the Loan-to-Value (LTV) ratio is 75%, the interest rate is 12% per annum, and the loan tenure is 12 months.
Steps to Calculate are as Follows:
1. The person inputs the data as gold purity and the actual weight of gold.
2. The Gold Loan calculator fetches the current market price and estimates the gold value.
Net gold weight x market price per gram
30 g x ₹ 5,500 = ₹ 1,65,000
Hence, the total gold value = ₹ 1,65,000
3. Now it calculates the eligible amount:
Eligible loan value x LTV ratio
₹ 1,65,000 x 75%= ₹ 1,23,750
The maximum eligible Gold Loan amount is ₹1,23,750
4. To calculate the monthly interest:
Loan amount x interest rate
₹ 1,23,750 x 12%= ₹ 14,850
To know the monthly interest:
₹14,850/ 12= ₹ 1,237.50
Therefore, the monthly interest is ₹ 1,237.50
If a person chooses an interest-only Gold Loan, they pay only the monthly interest, and the principal amount is repaid at the end. Hence:
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Monthly interest: ₹1,237.50
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Final repayment amount: ₹1,23,750
If the person chooses an EMI Gold Loan, using the EMI formula, the monthly instalment for 12 months is approximately ₹10,995.
Also Read: How is a Gold Loan Amount Calculated?
Why Should One Use an Online Gold Loan Calculator?
The key benefits of using a Gold Loan calculator are as follows:
1. Better Financial Planning
The calculator helps users know how much loan they can get against their pledged gold. It enables hassle-free pre-planning before borrowing.
2. Saves Time and Effort
There is no need to visit a branch or perform manual calculations. Users can get all the necessary details instantly with just a few clicks.
3. Avoids Over-borrowing
By estimating the actual loan amount for the gold assets, the calculator helps borrowers make informed decisions and avoid taking more than necessary.
4. Clear Expectations Before Application
Users can get a clear idea of total interest payable, repayment details, EMIs, and loan tenure in advance. This helps reduce confusion during the application process.
To Conclude
Obtaining a Gold Loan has become easy and convenient. With the Gold Loan calculator, you can confidently determine the loan amount for your pledged gold. The calculator also helps you arrange your repayments effectively and make smart financial decisions. Simply enter the weight and purity of your gold, and the calculator will quickly display your projected loan amount.
If you're on the lookout for a hassle-free Gold Loan, apply today with Poonawalla Fincorp and use your idle gold assets to access funds quickly and securely. Check your qualified loan amount using the calculator and schedule repayments conveniently.
FAQs
Can a Gold Loan calculator give accurate estimate for pledged Gold?
Usually, the estimate is approximate. The final loan amount is determined only after a physical evaluation of the gold at the branch and lender's internal policies.
Do stones added to jewellery reduce the loan amount?
Yes. Lenders consider only the net weight of gold, excluding any stones or other non-gold elements. Jewellery studded with stones will result in a lower eligible loan amount.
Do online Gold Loan calculators update current gold rates regularly?
Yes, most online calculators update the gold rate daily, while some may update in real time depending on how they are built. Always ensure the latest rate is used for better accuracy.
Do all lenders offer a 75% LTV ratio?
RBI caps the maximum LTV ratio at 75%. However, the final LTV offered may vary depending on the lender’s policies and internal criteria.
Are there any restrictions on the gold that can be pledged for a loan?
Yes. Generally, a borrower can pledge up to 1 kg of gold jewellery and 50g of gold coins, though individual lender policies may vary.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply