Gold Loan Interest Calculator
Calculate your gold loan interest for a 12-month plan. See month-by-month interest breakup and total interest payable. Use this as a practical repayment benchmark and confirm exact lender terms before applying.
12-Month Planning View
Gold loan tenure and renewal rules vary by lender and product. This tool models a 12-month period for easier planning. Check your lender agreement for exact repayment and auction timelines.
Enter Loan Details
Enter the loan amount you received
Use as a benchmark; actual loan tenure may differ by lender
Loan Amount
Total Interest (12 Months)
Total Repayment
Interest Summary
Monthly Interest Payment
Interest Rate
Interest to Principal Ratio
Effective Annual Cost
Principal vs Interest Breakup
Month-wise Interest Breakup
| Month | Interest Amount | Cumulative Interest | Balance Principal |
|---|---|---|---|
| Total (12 Months) | - |
Calculate Your Gold Loan Interest
Enter your loan amount and interest rate to see the complete 12-month interest breakup with monthly details.
Understanding Gold Loan Interest Calculation
How Banks Calculate Interest
Reducing Balance Method (Compound Interest):
Banks calculate interest on the outstanding principal balance each month. As you pay interest, the principal reduces for subsequent calculations.
Monthly Interest Formula:
Interest = Outstanding Principal × (Annual Rate ÷ 12)
Example:
₹1,00,000 at 12% p.a.:
Month 1: ₹1,00,000 × 1% = ₹1,000
If you pay ₹1,000 interest, principal stays ₹1,00,000
Month 2: ₹1,00,000 × 1% = ₹1,000 again
Repayment Options
Bullet Repayment (Most Common)
Pay interest every month, repay full principal at end of 12 months
Partial Prepayment
Pay interest + part principal anytime to reduce interest burden
Interest Capitalization
Unpaid interest added to principal (increases total cost)
Interest Cost Comparison (₹1 Lakh Loan)
| Lender | Interest Rate | Monthly Interest | Total Interest (12 Months) |
|---|---|---|---|
| SBI | 8.75% | ₹729 | ₹8,750 |
| HDFC Bank | 9.50% | ₹792 | ₹9,500 |
| ICICI Bank | 10.00% | ₹833 | ₹10,000 |
| Axis Bank | 11.00% | ₹917 | ₹11,000 |
| IIFL Finance | 14.00% | ₹1,167 | ₹14,000 |
| Muthoot Finance | 16.00% | ₹1,333 | ₹16,000 |
* Based on ₹1,00,000 loan amount for 12 months. Actual rates may vary.
Frequently Asked Questions
Why is the tenure fixed at 12 months?
Gold loan tenure depends on lender policy and product terms. This calculator intentionally uses a 12-month planning window because many gold-loan products are reviewed or closed around 1 year. Always verify exact tenure, renewal, and auction terms in your sanction letter and lender policy.
How is gold loan interest calculated?
Banks calculate gold loan interest using the reducing balance method (compound interest). Interest is calculated monthly on the outstanding principal: Monthly Interest = (Outstanding Principal × Annual Rate) ÷ 12. If you don't pay the monthly interest, it gets added to the principal (capitalized), and next month's interest is calculated on this higher amount, increasing your total cost.
What happens if I don't pay interest every month?
If you don't pay monthly interest, most banks capitalize the unpaid interest (add it to principal). This increases your loan amount and next month's interest. Some banks may charge penalty interest on overdue amounts. Always check your loan agreement terms.
Can I prepay my gold loan?
Yes, most banks allow prepayment of gold loans. Public sector banks usually don't charge prepayment penalties. Private banks and NBFCs may charge 0-2% depending on the loan agreement. Prepaying reduces your total interest burden.
What are the charges besides interest?
Additional charges may include: Processing fee (0.5-2% of loan amount), Valuation charges (₹250-500), Stamp duty as per state laws, Late payment penalty (2-4% per month on overdue), Auction charges if you default. This calculator shows only interest; add these separately.