How gold loan interest works
On a repayment basis, interest is worked out each month on the balance you still owe, at one twelfth of the annual rate, so it falls as you repay. On interest only, the balance stays the same until the end, so you pay the full month's interest every month.
Gold loans are usually short, and some charge everything at the end in one payment. This calculator covers monthly repayment and monthly interest only. Lenders may calculate interest differently (some charge it daily), so your actual interest can differ slightly.
Worked example
Borrowing £2,000 at 12% over 12 months on a repayment basis costs £132.37 in interest, 6.6% of the amount borrowed, with a monthly payment of £177.70.
On interest only, the same loan costs £20.00 a month and £240.00 in interest, with the £2,000 repaid at the end. Repaying over 6 months instead cuts the interest to £70.58, though the payment rises to £345.10.
Ways to pay less interest
Borrow only what you need, choose the shortest term you can manage and repay capital as you go if you can. Compare the APR and any valuation, storage or other fees, not just the interest rate.
Inputs for the gold loan interest calculator
Amount to borrow
The amount you want to borrow against your gold.
Interest rate (per year)
The annual interest rate on your gold loan. If your lender quotes a monthly rate, multiply it by 12. The rate shown is only an example, so enter the rate from your quote.
Term
How many months you'll repay over. A longer term means paying interest for longer.
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 interest calculator questions
How is interest on a gold loan calculated?
Each month, at one twelfth of the annual rate on what you still owe. The calculator adds it up over the term.
How much interest would £2,000 cost?
At 12% over 12 months, £132.37 on repayment or £240.00 on interest only.
Why does interest only cost more?
The balance doesn't fall, so you pay interest on the full amount every month.
What's the difference between the interest rate and the APR?
The interest rate is what's charged on the balance. The APR also includes most compulsory fees, so it's better for comparing the overall cost of different loans.