The concept of loan against goal, though centuries old, has brought a whole new dimension to the idle asset, gold. Your gold jewellery and articles are a source of availing short notice loan without any hassle. All you need to do is keep your gold as collateral with the loan funding institution and get it back once the gold loan repayment is made successfully.
Understanding the process of the gold loan repayment procedure is essential to completely understand the working of a gold loan. How will I repay the loan? What are the gold loan repayment options? What process should I choose? All these are some of the questions that might pop into your mind when you are planning for a gold loan. There are a plethora of gold loan repayment options that you can choose from. Check out your gold loan repayment period and accordingly choose a mode that best suits your interests.
Some of the most commonly chosen methods of gold loan repayment include interest-only EMIs, monthly EMIs, bullet payments, etc. At some point during the gold loan repayment period, if you want to make a foreclosure of your gold loan, you can opt for it. Most of the banks and NBFCs charge no penalty on the loan's foreclosure. Check out the various gold loan repayment options given below
One of the most common ways of gold loan repayment is through the regular or monthly EMIs option. It comprises the repayment of both the principal amount and the interest accumulated.
All those individuals who have a regular source of monthly income can opt for a monthly EMI repayment option for a gold loan. A fixed amount of principal amount and interest is paid every month as EMI to the funding institution.
Another form of EMI repayment option is the interest-only EMI. As the name suggests, under this type of EMI, only interest on gold loan amount is paid through EMI. So, what about the principal amount? The principal amount is later paid back at the end of the gold loan tenure by the borrower. It lessens the burden of principal amount repayment on the borrower.
He/she can arrange the principal amount during the gold loan repayment period and, in the end, pay the amount without any hassle.
In simple words, a bullet repayment option gives you the option to repay the complete loan amount, including the interest accrued on it at the end of the gold loan tenure. You may wonder what is the benefit of such a gold loan repayment option. Well, you get to accumulate the complete loan amount and interest and repay at the end of the tenure without any liability of arranging repayment money every month or at every interval. You can utilise the gold loan tenure in accomplishing your financial goals and repay it in one shot at the end of the tenure.
If you are looking for a highly flexible gold loan repayment option, the partial principal repayment option is one of the ideal options. Under this gold loan repayment option, you can repay the principal amount and interest as and when you find it suitable. You just need to repay the complete amount within the gold loan repayment period.
You can also opt to first pay the principal amount and later pay the interest charged to reduce the overall interest. If you pay the principal amount early, the interest charged will be low.
You can also choose to repay the gold loan amount prior to the end of the tenure. This is called the foreclosure of the gold loan. Most banks and NBFCs charge no fees on such repayment options. However, a few may charge some penalty.
Yes. You can choose to repay the pending loan amount before the tenure ends. However, some banks or NBFCs may allow this option only at the cost of some penalty for the preclosure of the gold loan. So, read all the clauses and terms properly before you borrow a loan.
A gold loan is granted against the gold articles that you keep as collateral with the bank/NBFC. Hence, if you fail to repay the gold loan on time, the bank/NBFC will confiscate your gold articles kept as collateral and get them auctioned. Legal actions may also be taken against the borrower if the complete loan amount is not received by the funding institution.