What are the Various Gold Loan Repayment Methods that You can Opt for?

Last Updated : April 18, 2020, 6:40 p.m.

Do you know you can get a loan from banks and financial institutions by submitting your gold lying idle in your home? Yes, you certainly can! Loan against gold ornaments is popularly called a gold loan, which can be a good choice for you when you require funds immediately. The reasons are many, with the first being the low and affordable interest rates that you would get due to its secured nature. Second, it brings a certain credit mix to your overall profile. But one of the primary reasons so many people opt for it is due to its flexible repayment methods.

The repayment methods tend to change from one lender to another. At the time when you are applying for a gold loan , it is important to know about all the repayment methods so that you can choose the most suitable one for you. While choosing the right method, it is important to keep your repayment capacity in mind so that you don’t face any problem when repaying the loan.

So, if you want to know about the various gold loan repayment methods, this article could be a perfect read for you. In this article, we will tell you about all the methods with appropriate examples. So, keep reading!

Different Gold Loan Repayment Modes

In any case of a loan facility, repayment is certainly a major factor. And when we talk about the gold loan, there are not one but four types of repayment methods from which you can choose. You can have a look at all the repayment methods mentioned below.

• Interest Payment at a Regular Interval and Principal Amount at the end of the Tenure
• Upfront Interest Payment and Principal Amount at the end of the tenure
• Regular Monthly Installment Payment
• Bullet Repayment Method

Interest Payment at Regular Intervals – Monthly/ Quarterly/ Semi-yearly/ Yearly

This is the first gold loan repayment method in which you can choose to pay the interest amount at any of the regular intervals – monthly, quarterly, semi-yearly, or yearly basis – and pay the principal amount at the end of the tenure. You can thus choose the interval that you are comfortable with. He or she doesn’t have to worry about the principal repayment during the tenure. However, you will have to pay the full principal amount at the end of tenure.

Upfront Interest Payment

As we told in the previous method how you can choose to pay the interest amount at regular intervals by your choice. Through this method, you can pay the total interest amount upfront at the start of the loan and pay the principal amount at the end of the tenure. By opting for this method, you won’t have to worry about the payment during your tenure as you will only need to pay the principal amount at the end of tenure.

While choosing this method, you must keep your repayment capacity in your mind as you will have to pay a huge amount after the tenure ends. And your pledged gold will only be released when there is no outstanding loan amount left on your name.

Regular Monthly Installments (EMI)

This is a more traditional method of gold loan repayment. Almost all other loans such as personal loans, home loans, car loans, and others provide this repayment method. Through this method, you can pay both your principal and interest amount during the tenure through the Equated Monthly Installments (EMI). This amount will have a portion of your principal and a portion of your interest amount. The EMI amount will be deducted from your bank account every month in a hassle-free manner. This method is great for those applicants who have got a regular income inflow.

To get an understanding of this method, you can also use the Gold Loan EMI Calculator. It will give you the exact EMI amount by feeding a few details like the required loan amount, rate of interest and the required tenure. Suppose that you are taking a gold loan of INR 7,00,000 for a period of 24 months at an interest rate of 15.50% per annum. On feeding all these details in the Gold Loan EMI Calculator, you will get the EMI amount as INR 34,107. You will have to pay this amount every month to repay your loan amount.

Bullet Repayment Method

This is one of the most flexible gold loan repayment methods that you can choose. In this method, you don’t have to pay any amount during your tenure. You can pay both the principal and interest amount after your tenure completes. That’s why this method is known as the Bullet Repayment. You don’t need to worry about the payment during your tenure, just make the full payment when your tenure ends. However, you need to keep this thing in mind that your interest amount will be calculated every month, and it will be added to your principal amount.

So, these are the gold loan repayment methods from which you can choose according to your repayment capacity and monthly income. Any non-payment will affect your credit score and might make you lose your precious gold ornaments to the lender, so choose wisely!