## What is the Gold Loan Interest?

A gold loan is a kind of secured loan that is provided by financial institutions in exchange for the gold owned by the loan applicant.Â An interest is applied, depending on:

- The amount of loan amount: the lesser the loan amount, the greater the interest rate.

### Method 1 – Using the Excel PMT Function to Calculate the Gold Loan Interest

This is the syntax of **the PMT function:**

**PMT(rate, nper, pv, [fv], [type])**

**rate** is the annual interest rate of the loan.

**nper** is the loan tenure (number of years for which the loan is approved).

**pv** is the principal value or the initial loan amount.

**fv** is the future value; optional.

**type** specifies when the payment is due; optional.

You have taken a 1-year gold loan from a bank with an interest rate of 2% and a loan amount of $5,000. To calculate the monthly loan payment for the borrowed amount and find the total interest:

**Steps:**

- Enter the formula in
**C9**and press**Enter**.

`=-PMT(C4/12,C5*12,C6)`

In the **PMT** formula, the interest rate is divided by 12 to calculate monthly payments.

This the monthly payment.

- To calculate the interest, enter the formula in
**C10**.

`=C9*12`

- Press
**Enter**.

The output is $5,054

- To calculate the total amount of interest, enter the following formula in
**C11**.

`=C10-C6`

- Press
**Enter**to see the result.

### Method 2 – Using a Mathematical Formula to Find the Gold Loan Interest

The generic formula is:

`= [ P x R X (1 + R) ^ N] / [ (1 + R) ^N â€“ 1]Â `

**P** is the principal amount.

**R** is the interest rate.

**N** is the number of payments in the loan period.

Consider the example in the previous method (12 months, interest rate: 2%, loan amount: $5,000) and calculate the EMI.

**Steps:**

- Enter the formula in
**C9**.

`=(((C6*C4/12)*(1+C4/12)^C5))/(((1+(C4/12))^C5)-1)`

- Press
**Enter**.

The monthly loan paymentÂ is $421.19.

- To calculate the total payable amount and total interest use the formulas in Method 1 to see the results.

**Read More: **How to Calculate Principal and Interest on a Loan in Excel

## Things to Remember

The PMT function returns the payable amount as a negative number (red color, closed in parenthesis); which means the money is getting deducted from your bank account. To see the payable amount as a positive number, add a minus (-) sign at the beginning of the PMT formula.

You can calculate the gold loan interest using the EMI calculator.

**Download Practice Workbook**

Download the practice workbook here.

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- How to Calculate Credit Card Interest in Excel

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