How is the Interest Rate for a Gold Loan of Rs. 1 Lakh Calculated

How is the Interest Rate for a Gold Loan of Rs. 1 Lakh Calculated

Learn how the interest rate on your gold loan is calculated and how you can plan your repayment better.
Features

Features

Calculator

Calculator

FAQs

FAQs

Videos

Videos

Rs. 5,000 - Rs. 2 crore

Calculate Loan Interest

To find the nearest gold loan branch,

click here

Enter phone and OTP | Check amount you can get | Apply for quick funds

How your gold loan amount and interest are worked out

When you apply for a gold loan, understanding how the loan amount and interest are calculated can help you plan your finances better. The loan value is determined mainly by the purity and weight of your gold jewellery, ornaments or coins along with the applicable loan-to-value ratio. Bajaj Finance offers gold loans with interest rates ranging from 9.50% to 24% per annum, and loan amounts starting from Rs. 5,000 up to Rs. 2 crore.

For example, if the value of the pledged gold is Rs. 1,00,000 and the applicable Loan-to-Value (LTV) ratio is 85%, then the eligible loan amount works out to Rs. 85,000. Assuming an annual interest rate of 24% on 22 carat gold, the interest is calculated on the sanctioned loan amount based on the chosen tenure.

  • For a 12-month tenure, the interest would be approximately Rs. 20,400
  • For a 6-month tenure, the interest would be approximately Rs. 10,200
  • For a 3-month tenure, the interest would be approximately Rs. 5,100

In this case, the total repayment amount will include the principal loan of Rs. 85,000 plus the applicable interest based on the selected tenure. Shorter tenures reduce the overall interest cost, while longer tenures provide more repayment flexibility.

To avoid confusion and manual calculations, you can use an online gold loan calculator. It clearly shows the interest payable and helps you understand repayment obligations before taking the loan.


Factors affecting gold loan interest rates

Here is a quick look at the factors affecting interest rates and how you can plan your repayment around it:

Loan amount

Obtaining a larger loan is easier when using gold jewellery as collateral due to its high market value. Most lenders will provide up to 75% of the total value of the gold you pledge, which aligns with RBI regulations. Bajaj Finance offers Gold loans starting from Rs. 5,000 and going up to Rs. 2 crore against gold jewellery of 18 karat purity.

Market price of gold

The gold loan interest rates are influenced by external factors such as inflation, global gold prices, and demand-supply dynamics in the gold market. Lenders closely monitor these rates as they directly impact the value of the gold collateral. Generally, when the price of gold rises, interest rates tend to decrease, making it more manageable for you to repay your loans. Bajaj Finance considers the lower of the average closing price for your gold's specific purity over the last 30 days or the previous day's closing price, as published by IBJA or a SEBI-regulated commodity exchange.

You can also use the gold loan calculator by Bajaj Finance, which features the changing gold loan per gram rate to assess the maximum loan amount availability as per the weight the of gold you own.

Monthly income

Gold loans are typically easy to apply for and require minimal paperwork. Since your loan is secured against physical gold, any salaried, self employed individual, pensioner or homemaker can apply for this loan. Though having a steady income source may lead to a lower interest rate offer, as it indicates your ability to repay the loan. You just need any one of the basic gold loan documents like - Aadhaar Card, voter ID card, passport, driving licence, NREGA job card, or a letter from the NPR.

Repayment frequency

The frequency of your gold loan repayments also affects the amount of interest charged. Opting for a gold loan repayment plan with more frequent payments can result in a lower interest rate, while fewer payments may lead to a higher interest rate. When calculating the interest rate for your gold loan, consider factors such as the loan amount and repayment frequency. You can also use our online gold loan calculator to determine your payable instalments and plan your financial journey more effectively.

Bajaj Finance offers you the additional benefit of choosing from multiple repayment options. You can choose to pay the entire gold loan interest at the beginning of the tenure and pay the principal back at the end. You can also choose to pay the interest monthly, bi-monthly, quarterly, half-yearly, or annually as per your convenience.


Before you pledge your gold, know your options. Check your gold loan eligibility and choose the right amount and tenure.

Show More Show Less

Gold loan interest rates and charges

The interest rate for a gold loan depends on several factors like the weight and purity of the pledged gold, loan amount, and repayment tenure. Bajaj Finance offers attractive rates, ranging from 9.50% to 24% p.a., to ensure affordability. Since the loan value is linked to the gold price today, higher prices mean you can get a higher loan amount for the same gold weight. This makes gold loans an efficient and transparent borrowing option for quick funds.

Show More Show Less

Locate your nearest branch

Banner_NEW_Storelocator_XAOP_App_22042026.png

Eligibility criteria and documents required to apply for gold loans

Getting a Bajaj Finserv Gold Loan is simple because the eligibility rules are straightforward. You just need to be an Indian citizen between 21 and 80 years of age and have 18-22 karat gold jewellery of the required purity. There is no need to worry about complicated paperwork. As long as you have gold jewellery, ornaments and coins to pledge, you can quickly qualify and get access to funds without stress.

You also need to submit any one of the following KYC documents for gold loan to complete your application process:

  • Aadhaar card
  • Voter ID card
  • Passport
  • Driving licence
  • NREGA job card
  • Letter issued by National Population Registration
     

LTV 

The loan-to-value (LTV) ratio for gold loans is set as prescribed by the Reserve Bank of India. Bajaj Finance adheres to the guidelines set by RBI and offers the same LTV ratio while handing out loans. Here is a LTV break down:

 The maximum LTV eligible for consumption loans per borrower depends on the loan amount and cannot be more than the limits given:

1. For loans up to %$$GL-LTV-bracket 1-loan-amount$$% = LTV 75%

2. For loans between more than %$$GL-LTV-bracket 1-loan-amount$$% to %$$GL-LTV-bracket 2-loan-amount$$% = LTV 80%

3. For loans from more than %$$GL-LTV-bracket 2-loan-amount$$% up to Rs. 2 crore = 85%


Though the PAN card is not a mandatory requirement, if you apply for a gold loan of Rs. 5 lakh or above you will be asked to submit your PAN card as well.
 

Curious about your loan eligibility? Enter your mobile number to see how much you can get for your gold.

Show More Show Less

Latest RBI updates

Section

Parameter

Applicable Details

 

Eligibility Criteria

Gold purity accepted

18-22 Karat for jewellery and ornaments

24 karat for gold coins

Eligible collateral types

Gold ornaments, jewellery, and coins

 

 

 

 

 

 

 

 

 

Eligible limit for each collateral type

Ornaments

Total pledged weight across all loans must not exceed 1 kilogram

Gold coins

The total weight of gold coins pledged cannot be more than 50 grams.

Gold Jewellery

As per maximum loan amount.

Overall exposure limit

The total loan exposure across ornaments, jewellery, and gold coins together must not exceed the maximum loan limit of Rs. 2 crore.

Collateral protection

 

Any loss, damage, or discrepancy in the quantity or purity of your pledged gold identified during audit, return, or auction will be recorded and promptly communicated to you or your legal heirs. The reimbursement or compensation process, as per company policy and SOP, will be clearly explained. Delays in collateral release due to lender fault will attract compensation of ₹5,000 per day.

 

 

 

Gold loan renewal

Renewal parameter

You can request renewal of your gold loan before maturity if it remains in standard status and within permissible LTV limits. This facility is available only to existing customers. For bullet repayment loans, accrued interest must be cleared. Renewals are subject to credit checks, fresh applicable charges, and are not allowed after maturity.

 

 

Gold loan top up

Top up parameter

Top-up is allowed before maturity, subject to regulatory LTV limits, credit assessment, and customer eligibility. Fresh fees and charges apply. Top-up after maturity is not permitted, even if dues are outstanding. Top up facility is available only to existing users.

 

 

 

LTV (Loan to Value)

For loans up to Rs.2.5 lakh

85%

For loans between more than Rs.2.5 lakh to Rs.5 lakh

80%

For loans from more than Rs. 5lakh to Rs. 2 crore

75%

 

 

 

Gold Value

Evaluation parameter

As per the latest guidelines, gold loans are offered against specific purity of gold jewellery, ornaments and gold coins, valued using lower of the average closing price for your gold's specific purity over the last 30 days or the previous day's closing price, as published by IBJA or a SEBI-regulated commodity exchange, within prescribed limits and subject to KYC and timely repayment.

How to apply for a gold loan

Applying for a Bajaj Finserv Gold Loan is quick and convenient. Just visit the nearest branch with your gold and valid KYC documents. The team will check the purity and weight of your gold, calculate your eligible loan amount, and process it on the spot. Most of the time, the loan amount is disbursed to your account mostly on the same day, so you can walk out with funds ready when you need them. For added convenience, you can also apply online, via the Bajaj Finserv App or website. 

Turn your gold into instant support—handle any expense with ease. Check your gold loan eligibility and access funds when you need them most.

Show More Show Less

Related Articles

Article 1

Read More

 Article 2

Read More

 Article 3

Read More

 Article 4

Read More

You are here

Related Links

Disclaimer

Bajaj Finance Limited (BFL) has the sole and absolute discretion, without assigning any reason to accept or reject any application as per BFL policy. *