When you turn to a gold loan calculator, the two details that matter most are the purity of your gold and its net weight. These determine the actual value of your gold and influence how much you can borrow. To make informed decisions, it helps to understand how purity and weight affect your results, how lenders use these inputs, and what you should watch for. Let’s break this down clearly with simple steps and examples so you can use a gold loan calculator more confidently.
Gold value is driven by how much pure gold is present. That boils down to:
Weight — how many grams of the item you bring to the lender after removing non-gold parts.
Purity — the fraction of the item that is pure gold (measured in karats or fineness).
A gold loan calculator multiplies these two elements with the market rate and then applies the lender’s loan-to-value (LTV) percentage to arrive at an eligible loan amount.
You enter net weight (in grams).
Lenders exclude non-gold parts (stones, beads, threads). Always enter the net gold weight, not the gross jewellery weight if you know the difference.
You select or enter purity.
Purity is usually given as karats (24K, 22K, 18K) or fineness (999, 916, 750). The calculator converts karat to a decimal factor:
Purity factor = Karat ÷ 24.
Example: 22K → 22 ÷ 24 = 0.9167.
The tool computes pure gold weight.
Pure gold weight (g) = Net weight × Purity factor.
It multiplies by the rate per gram.
Calculators either ask you to enter the current market rate per gram or fetch it automatically.
Gold value = Pure gold weight × Rate per gram.
LTV is applied to get eligible loan.
Lenders lend a percentage of the gold value. Many lenders use up to 75% LTV, but the calculator will apply whatever LTV you select.
Eligible loan = Gold value × LTV.
Optional: interest and EMI calculation.
If you provide interest rate and tenure, the calculator will estimate monthly payments and total interest cost.
Let’s look at two examples:
If you enter the details of a 22K gold chain into a gold loan calculator, the result is driven by purity and weight. Here’s how the amount is worked out step by step:
Purity factor: 22 ÷ 24 = 0.9167
Pure gold weight: 40 g × 0.9167 = 36.668 g
Gold value: 36.668 g × ₹6,500 = ₹238,342
Eligible loan (75% LTV): ₹238,342 × 0.75 = ₹178,756 (approx.)
Even though the item weighs 40 grams, the purity factor reduces it to 36.668 grams of pure gold, which is what the calculator uses for the loan estimation.
For an 18K item, the calculator’s output changes significantly because purity is lower. This example shows how gold with the same rate but different purity results in a smaller loan amount:
Purity factor: 18 ÷ 24 = 0.75
Pure gold weight: 30 g × 0.75 = 22.5 g
Gold value: 22.5 g × ₹6,500 = ₹146,250
Eligible loan (70% LTV): ₹146,250 × 0.70 = ₹102,375
Here, the gross weight is 30 grams, but only 22.5 grams count as pure gold. This is why the eligible loan is much lower compared to a higher-purity item.
Always use net weight. Remove stones and non-gold fittings before you measure, or let the branch exclude them. If you mistakenly use gross weight, the calculator will overstate eligibility.
Enter the correct purity. Hallmarked items show purity clearly (e.g., 916 for 22K). If purity is unknown, the lender will test the item and may apply a conservative factor on sanction.
Use a realistic rate per gram. Some calculators use spot rates; others use an internal lender rate which may be lower. If you want to be conservative, enter a slightly lower rate than the market spot.
Check the LTV used. A higher LTV increases the eligible loan but may come with higher fees or stricter terms. Do not chase LTV alone—compare net cost.
Understand rounding rules. Lenders may round the sanctioned amount to the nearest hundred or thousand; the calculator’s result can differ slightly from final sanction.
For the same gross weight:
Higher karat (closer to 24K) yields a higher pure gold weight and therefore a higher loan.
Lower karat reduces pure content; for example, a 20 g piece of 24K and a 20 g piece of 18K yield very different loan values because 24K is 100% gold while 18K is only 75%.
Using inaccurate inputs. If you guess weight or purity, your estimate will be unreliable. Have a jeweller or the lender weigh and test the piece if unsure.
Ignoring non-gold components. Stones, enamel, or heavy settings reduce net gold weight; do not count them.
Assuming market spot = lender rate. Lender rates are usually a published internal rate or an average; verify with the branch.
Failing to compare LTV and fees together. One lender might offer higher LTV but charge heftier processing fees or a higher interest rate.
Know the net weight of your item in grams.
Confirm the purity (karat or fineness).
Use an appropriate rate per gram (ask lenders if unsure).
Enter the LTV you expect to receive.
Input the interest rate and tenure to see repayment estimates.
Verify final valuation at the lender’s branch; the calculator is an estimate.
A gold loan calculator is a practical first step when considering a Gold loan. It turns weight and purity into clear numbers, helping you estimate how much you can borrow and what repayments might look like. Use the calculator with accurate inputs and the right assumptions, and you will gain a reliable estimate that makes comparing lender offers straightforward and sensible. When in doubt, confirm final values with the lender, numbers from a calculator are guides, not final sanctions.
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