Flat
Rate method used by 90%+ of pawn brokers
18%
Most common annual interest rate — South India
₹1,500
Monthly interest on ₹1 lakh at 18% p.a.
The Gold Loan Interest Formula
Gold loan interest in India is most commonly calculated using the flat rate (simple interest) method. The formula is:
Monthly Interest = Principal × (Annual Rate ÷ 12 ÷ 100)
Daily Interest = Principal × (Annual Rate ÷ 365 ÷ 100)
Total Interest = Principal × (Annual Rate ÷ 100) × (Days ÷ 365)
Daily Interest = Principal × (Annual Rate ÷ 365 ÷ 100)
Total Interest = Principal × (Annual Rate ÷ 100) × (Days ÷ 365)
Quick Calculation Examples
| Loan Amount | Rate (p.a.) | Monthly Interest | 6-Month Total | 12-Month Total |
|---|---|---|---|---|
| ₹10,000 | 18% | ₹150 | ₹900 | ₹1,800 |
| ₹25,000 | 18% | ₹375 | ₹2,250 | ₹4,500 |
| ₹50,000 | 18% | ₹750 | ₹4,500 | ₹9,000 |
| ₹1,00,000 | 18% | ₹1,500 | ₹9,000 | ₹18,000 |
| ₹2,00,000 | 18% | ₹3,000 | ₹18,000 | ₹36,000 |
| ₹5,00,000 | 18% | ₹7,500 | ₹45,000 | ₹90,000 |
Interest at Different Rates
The monthly interest varies significantly based on the lender type and their applicable interest rate:
| Lender Type | Rate | Monthly Interest on ₹1 Lakh |
|---|---|---|
| Public sector bank | 9% p.a. | ₹750 |
| NBFC (competitive) | 12% p.a. | ₹1,000 |
| NBFC (standard) | 18% p.a. | ₹1,500 |
| Pawn broker (low) | 18% p.a. | ₹1,500 |
| Pawn broker (high) | 24% p.a. | ₹2,000 |
Stepped Rate Calculation
Many South Indian pawn brokers use stepped rates — where the interest rate increases after a certain period, incentivising early repayment:
Example: ₹75,000 loan with stepped rate
Months 1–3: 12% p.a. → Monthly interest = ₹75,000 × 0.01 = ₹750
Months 4–6: 18% p.a. → Monthly interest = ₹75,000 × 0.015 = ₹1,125
Total interest for 6 months = (₹750 × 3) + (₹1,125 × 3) = ₹2,250 + ₹3,375 = ₹5,625
Months 1–3: 12% p.a. → Monthly interest = ₹75,000 × 0.01 = ₹750
Months 4–6: 18% p.a. → Monthly interest = ₹75,000 × 0.015 = ₹1,125
Total interest for 6 months = (₹750 × 3) + (₹1,125 × 3) = ₹2,250 + ₹3,375 = ₹5,625
Use Our Free Calculator
For any loan amount, any rate, and any duration — use our free Gold Loan Interest Calculator. It supports flat rate and reducing balance methods, shows daily and monthly interest, and generates a full amortisation schedule.
For pre-calculated interest tables at specific amounts:
₹10,000 interest
₹25,000 interest
₹50,000 interest
₹1 lakh interest
₹2 lakh interest
₹5 lakh interest
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