Must-Know Four Ways to Repay Your Gold Loan Easily
Gold holds significant value as an investment and is an asset when quick access to cash is required. In India, a strong emotional attachment and personal connection to gold lead individuals to accumulate gold jewelry, coins, and bars. When an immediate need for cash arises, families often pledge their privately-owned gold assets to banks and formal money-lending institutions. The gold serves as collateral until the loan is fully repaid.
The loan amount and interest rate for gold loans may vary depending on the bank and the value of the gold, and the loan tenure. After obtaining a gold loan, multiple options are available for repaying the principal amount and interest.
What Is the Gold Loan Repayment Procedure?
Various methods are available for repaying a gold loan, including EMIs, bullet repayment, partial repayments & foreclosure. With an EMI option, you can repay your gold loan by making regular instalment payments to the lender over a predetermined period. You can utilize the gold loan repayment calculator to determine your EMI amount.
Alternatively, the bullet repayment option allows you to make a lump sum payment of the interest and principal amount at the loan tenure's end.
Partial repayments are also possible, allowing you to make partial payments based on the availability of funds. You can easily pay off the entire principal and interest amount before the completion of the tenure. If you foreclose the loan, you can settle the outstanding loan amount and retrieve the pledged gold before the designated tenure ends.
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Four Different Ways to Repay a Gold Loan
There are several ways to repay your gold loan, such as:
Pay Interest as EMI & Principal laterChoosing this option, you can pay back the interest according to the gold loan's EMI schedule, and repay the full borrowed amount when the loan matures. Most borrowers find that this arrangement works well since they have to worry only about paying interest through the loan's term and repaying the principal only at the end of the term.
Make Partial PaymentsIf you decide to repay your gold loan through this method, you are not required to adhere to the EMI plan provided by the lender. Partial interest and principal payments are available whenever you like. You can thus modify your repayment plan to suit your financial position. If you opt to pay the principal amount immediately, your total interest pay-out, which is computed daily on the loan amount that is still outstanding, is decreased. You thus spend far less on beneficial interest.
Bullet RepaymentYou have to pay back the principal and interest on a gold loan with bullet payback at the end of the loan's duration. Throughout the loan duration, you are not required to repay any loan amount. There is no worry of default because there is no EMI schedule to follow, and you have to repay the loan at the term’s end in full. The interest on the gold loan amount accumulates each month, but it is only due at the end of the loan term.
Regular EMI optionThe regular EMI Gold loan is designed for those who receive monthly money deposits into their bank accounts and is targeted at the salaried class. In such a case, the EMI amount will include the interest and principal amount. Since this loan is usually given to salaried applicants the procedure for granting it is very swift.
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A gold loan will always be among the most popular methods of borrowing because of its quick loan approval, few paperwork requirements, flexible repayment choices, and other advantages. Before selecting a loan type, borrowers should examine interest rates and duration alternatives using a gold loan repayment calculator. They must also research different repayment options and financial conditions to choose the most advantageous loan repayment strategy.
Unlike the usual EMI option, the foreclosure option through partial repayments might reduce the interest amount. Using the bullet repayment method, the borrower can avoid paying back the loan balance throughout the term. Borrowers should select the best gold loan repayment plan after weighing these advantages and disadvantages and assessing the likelihood that money will be accessible.