The maths, with your numbers
What paying extra would do
Every dollar above the payment comes straight off the balance, so the interest stops being charged on it. These are worked out from the loan above.
How the balance falls
The same loan over different terms
| Term | Payment | Total interest | Total repaid |
|---|
A longer term lowers the payment and raises the interest. Your loan is highlighted.
Amortization schedule
Where each payment goes, from the first to the last.
A gold loan is a short-term loan secured on gold jewellery or coins. It is a mainstream product in India, where banks and finance companies lend against household gold, and a niche one in the United States, where the equivalent is a pawn loan.
India: the rules are set by the central bank
The Reserve Bank of India's 2025 directions on lending against gold and silver set tiered limits on how much can be lent against the metal's value, effective from April 2026: 85% for loans up to ₹2.5 lakh, 80% between ₹2.5 and ₹5 lakh, and 75% above that. The ratio has to be maintained throughout the loan, which is why lenders ask for repayment or more collateral if the gold price falls.
Use the calculator above with your own rate and term. The payment arithmetic is the same everywhere; only the currency symbol differs.
The United States: pawn, and it is expensive
American pawn loans are regulated state by state, and the permitted charges are high. Texas, for example, publishes a statutory rate chart where the maximum service charge on the smallest loans works out at an annual rate in the hundreds of percent, with one-month terms. The CFPB describes pawn loans as typically under $1,000, at high rates, for a month or less.
If you are comparing a pawn loan with anything else, convert it to an APR first. Our APR calculator will do it, and the result is usually the argument against.
What to check before pledging gold
- What happens if you cannot repay: the metal is sold, and any shortfall or surplus rules vary.
- Whether the valuation is on weight and purity, and who does it.
- Storage and insurance arrangements while the lender holds it.
- The total cost in money, not the monthly payment.
Quick answers
How much can I borrow against gold?
In India the Reserve Bank caps it at 85% of the gold's value for small loans, 80% up to 5 lakh and 75% above that, maintained throughout the loan.
What is the US equivalent of a gold loan?
A pawn loan, regulated state by state. Charges are high: Texas, for example, publishes statutory rates reaching triple-digit annual percentages on small loans.
What happens if I do not repay?
The lender sells the gold. The rules on any shortfall or surplus depend on the lender and the jurisdiction.
Is a gold loan cheaper than a personal loan?
Sometimes, because it is secured. Convert both to an APR before deciding, and remember the collateral is at stake.
Sources
- Reserve Bank of India, Lending Against Gold and Silver Collateral Directions, 2025
- CFPB research brief on payday, auto title and pawn loans (2021)
- Texas Office of Consumer Credit Commissioner, pawn rate charts