How Gold Loan Amounts Are Calculated

How does a lender turn a few rings or bangles into a loan amount? In the tool’s default example, 20 g of 22K gold at a rate of 60 per gram supports an eligible loan of 825.00.

What a Gold Loan Is Sized From

A lender does not lend against the number on the scale. It lends against the value of the pure gold inside the pieces. So two items of equal weight can support different loan amounts.

The gold loan calculator follows this logic with five inputs. You enter the gold weight in grams, the purity in karats, the 24K gold rate per gram and the loan-to-value limit. The fifth input is a currency symbol, which changes only the label.

The purity choices are 24K, 22K, 20K, 18K and 14K. The LTV starts at 75 percent and stays between 0 and 100. You type the rate yourself, because the tool has no live gold price.

This article stays on sizing the loan. Interest, fees and repayment change what you repay, not what the gold supports, so they get a short section near the end.

Karat Purity Factors and Pure Gold

Karat measures how much of an item is pure gold, and 24K is pure. The purity factor is the karat number divided by 24. So 22K has a factor of 22 / 24, which is 0.916667.

The table uses 10 g of gold and a 24K rate of 60 per gram. Pure gold is weight times the factor, and value is that pure weight times the rate.

Every 2 karats removes one twelfth of the 24K value. That is 50 on a 600 base, which is why 24K, 22K, 20K and 18K step down evenly. A 22K piece holds 91.7 percent of the value of the same weight in 24K.

Pure gold content is why the same weight gives different values. A 10 g item at 22K holds 9.17 g of pure gold, and at 18K it holds 7.5 g. The factor is the only step that depends on purity, because weight, rate and LTV treat every karat the same way.

From Weight and Rate to Gold Value

Gold value is pure gold in grams times the 24K rate per gram. The tool takes the rate from you, so the value is only as current as the number you type.

Take the default example: 20 g of 22K gold and a rate of 60 per gram. Pure gold is 20 x 0.916667, which shows as 18.33 g. The tool carries more decimals than it displays, so the value is 20 x 22 / 24 x 60, or 1,100.00.

Now compare 24K. The same 20 g is all pure gold, so the value is 20 x 60, or 1,200.00. Weight and rate are identical, so purity alone accounts for the 100.00 gap.

Weight and rate scale the value in a straight line. Doubling either one doubles the value, while purity moves it by the karat divided by 24.

Enter the weight of the gold itself in grams. The tool takes your number as given, so ask your lender how it weighs and tests an item.

How Loan-to-Value Turns Value Into a Loan

Loan-to-value, or LTV, is the share of the gold’s value that a loan is allowed to reach. The tool multiplies the value by the LTV and divides by 100. At 75 percent, a value of 1,100.00 gives an eligible loan of 825.00.

A hand check can differ by a few cents. The tool shows two decimals but carries the unrounded value through each step. Multiplying the rounded 18.33 g by 60 gives 1,099.80, while the tool shows 1,100.00.

The LTV is a number you type, so it can describe any limit. At 80 percent, the same 1,100.00 gives 880.00. The tool keeps the entry between 0 and 100.

Each input scales the loan by multiplication. Doubling the weight doubles the loan, and a higher LTV raises it in proportion. For how LTV works on other kinds of loans, read the good loan-to-value ratio guide.

The RBI Loan-to-Value Tiers

In India, the Reserve Bank of India (RBI) sets maximum LTV tiers in its Lending Against Gold and Silver Collateral Directions, 2025. They are dated June 6, 2025 (RBI/2025-26/47). This summary follows the TaxGuru reproduction, because the RBI site refused automated access. Check the RBI’s current Directions before you rely on any limit.

The tiers cover consumption loans against eligible gold or silver collateral. They depend on the total consumption loan per borrower. A lakh is 100,000, so Rs 2.5 lakh is Rs 250,000.

Two clean illustrations show the arithmetic only. Gold valued at Rs 2,00,000 with a loan in the first slab has a cap of 85 percent, or Rs 1,70,000. Gold valued at Rs 10,00,000 with a loan above Rs 5 lakh has a cap of 75 percent, or Rs 7,50,000.

The slab depends on the total loan per borrower, so someone near a slab edge should ask the lender which cap applies.

How the RBI Defines and Applies LTV

The Directions define LTV as the ratio of the outstanding loan amount to the value of the pledged eligible collateral on that day. The ratio must be maintained throughout the loan tenor, not only on the first day.

For bullet repayment loans, where principal and interest are due at maturity, the calculation takes into account the total amount repayable at maturity. That figure includes interest as well as principal.

Covered lenders include commercial banks, co-operative banks and all non-banking financial companies (NBFCs). Compliance was required no later than April 1, 2026.

The tool values your gold once, at the rate you type. The RBI test repeats on each day of the tenor, so a lower gold rate raises the ratio of loan to value even when the loan has not changed.

These rules apply to Indian regulated lenders only, and other countries have other rules. The tool does not apply them. It uses whatever LTV you type, so enter the limit your own lender states.

What Interest, Fees and Limits Leave Out

Interest and fees change what you repay, not the loan amount shown here. The tool computes no interest, fees or term. For a rate-based repayment view, try the personal loan calculator, and compare rate quotes with the APR vs APY calculator.

• Typed gold rate. The tool has no live price, so the value is only as current as your entry.
• LTV caps differ. Limits vary by lender and by country, and the tool applies no regulator’s tiers.
• Fixed purity factors. The tool uses the karat divided by 24 for five purities only.
• Symbol only. The currency selector changes the label, not the numbers, and does no conversion.

This is general information, not financial advice, and it does not tell you to borrow or to pledge gold. Check your lender’s current terms for the rules that apply to you.

FAQs About Gold Loan Amounts

Sources and Further Reading

The tool multiplies weight, purity, your typed gold rate and an LTV you choose, and it does not apply any regulator’s limits. Check your lender’s current terms and the RBI Directions before you rely on a figure. Reviewed for accuracy by Prof. Dr. Khalil Mudassar, PhD. Last updated 2026-11-14.