How gold loans work
A gold loan is secured on gold jewellery, coins or bars that you hand to the lender. The lender values the gold by its purity and weight, then lends up to a share of that value, set by the lender. You get the gold back when the loan is repaid.
Gold loans are usually short. Some are repaid in monthly instalments, some ask for interest only each month with the loan repaid at the end, and some take everything in one payment at the end. Choose the repayment type that matches your offer.
Worked example
Borrowing £2,000 at 12% over 12 months on a repayment basis costs £177.70 a month, £2,132.37 in total, so £132.37 is interest.
On interest only, you'd pay £20.00 a month and the £2,000 at the end, £2,240.00 in total, so £240.00 is interest. Paying off the capital as you go costs less because the balance falls each month.
Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
If you can't repay
If you don't repay, the lender can sell your gold to recover what you owe. Check what happens if you miss a payment, how any surplus from a sale is returned, and whether there are valuation or storage fees.
Inputs for the gold loan calculator
Amount to borrow
The amount you want to borrow against your gold.
Interest rate (per year)
The annual interest rate on your loan. The rate shown is only an example, so enter the rate from your quote.
Term
How many months you'll repay over.
Repayment type
Repayment pays off the loan and interest in equal monthly payments. Interest only covers just the interest each month, with the full amount borrowed due at the end.
CALCULATOR QUESTIONS
Gold loan calculator questions
What is a gold loan?
A loan secured on gold you hand to the lender, which you get back once you've repaid.
How much can I borrow against gold?
Lenders value the gold by purity and weight and lend up to a share of that value. Use the gold loan eligibility calculator to estimate it.
Is interest only cheaper each month?
Yes, but it costs more overall. In the example, interest only costs £240.00 against £132.37 on repayment.
What happens if I don't repay?
The lender can sell your gold to recover the debt. Check the agreement for how a sale is handled.