Gold Loan Interest Calculation for ₹5 Lakh — Complete Guide
If you are taking or issuing a gold loan of ₹5 Lakh, understanding the interest payable is the first and most important step. The interest depends on three factors: the loan amount (₹5 Lakh), the annual interest rate charged by the lender, and the loan duration. This page provides a complete interest breakdown for ₹5 Lakh at all major interest rates used by lenders across India.
How to Calculate Interest on a ₹5 Lakh Gold Loan
The standard formula for gold loan interest calculation (flat rate method) is:
For ₹5 Lakh at 18% per annum for 30 days:
Interest = 500000 × 0.18 × 30 ÷ 365 = ₹7,397
Monthly Interest on ₹5 Lakh Gold Loan
At the most common pawn broker interest rate of 18% per annum, the monthly interest on a ₹5 Lakh gold loan is ₹7,500. This means if you pledge gold worth at least ₹6,66,667 (to meet the 75% LTV requirement) and borrow ₹5 Lakh, you pay ₹7,500 every month as interest to the pawn broker.
If you are with a bank or NBFC charging 12% per annum, the monthly interest on ₹5 Lakh drops to ₹5,000 — significantly lower than private pawn brokers. Always compare rates before taking a gold loan.
How Much Gold Do You Need for a ₹5 Lakh Gold Loan?
To be eligible for a ₹5 Lakh gold loan, the pledged gold must have a market value of at least ₹6,66,667 (since RBI allows a maximum of 75% LTV for banks and NBFCs). At today's 22K gold rate of ₹13,249/gram, you would need approximately ₹55 grams of 22K gold to qualify for a ₹5 Lakh loan.
Related Interest Calculations
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