How the rate is worked out
The calculator finds the monthly rate at which your payments exactly repay the money you actually receive, then turns it into an annual rate including the effect of compounding: APR = (1 + monthly rate)^12 − 1. Fees paid upfront, such as valuation or processing fees, reduce the money you receive, so they push the APR up.
Gold loans are often quoted with a monthly rate. The calculator also shows the monthly rate × 12, which is how a monthly rate is usually turned into an annual one without compounding.
Worked example
Borrowing £2,000 with a £50 upfront fee and repaying £185 a month for 12 months gives an APR of 27.6% and an interest rate of 24.6%. You repay £2,220.00, so the total cost of credit is £220.00.
With no fee, the same payments give an APR of 21.6%. A £100 fee would push it to 34.2%.
Using the rate to compare
Compare APRs for the same amount and term. Fees have a bigger effect on short loans, which many gold loans are, so check every charge before you agree.
This calculator works for loans repaid in equal monthly payments. It doesn't cover loans repaid in a single payment at the end.
Inputs for the gold loan interest rate calculation
Amount borrowed
The amount of the gold loan.
Upfront fees
Any valuation, processing or other fees you pay at the start, or that are taken from the loan. Enter 0 if there are none.
Monthly payment
Your regular monthly repayment from the quote or agreement.
Term
How many months the payments last.
CALCULATOR QUESTIONS
Gold loan interest rate calculator questions
How do I calculate the interest rate on a gold loan?
Find the monthly rate at which your payments repay the money you receive, then annualise it. The calculator does this for you.
What's the difference between APR and the interest rate?
The interest rate is what's charged on the balance. The APR also includes compulsory fees and the effect of compounding, so it's the better figure for comparing deals.
How do fees change the rate?
They reduce what you receive, so they raise the APR. In the example, a £50 fee adds about 6 percentage points.
My lender quotes a monthly rate. How do I compare it?
Multiply it by 12 for a simple annual rate, or use the APR, which also includes compounding and fees.