Gold Loan Tenure - Know the Maximum Tenure and Eligibility

Gold loans are increasingly popular as a convenient way to access funds for urgent financial needs. A loan on gold can provide the necessary support for both business and personal expenses.

The repayment tenure of a gold loan depends on factors like the loan amount, interest rate, purpose of the loan, specific lender policies, and the borrower's repayment capacity.

Usually, gold loans have a minimum repayment tenure of 7 days. The maximum repayment tenure can go up to 3 years. You can choose the tenure based on your liquidity needs and ability to repay comfortably.

The gold loan tenure or repayment period is the time frame within which you need to repay the loan amount. You can select a suitable repayment period after meeting the eligibility criteria on a gold loan.

The tenure varies between lenders, with long-term options generally extending up to 3 years and short-term options starting from 7 days. You can repay through Equated Monthly Instalments (EMIs) or via a lump sum at the end of the tenure. Some lenders may provide flexible plans based on your income status.

For example, suppose you took a gold loan of ₹1 Lakh with a 12-month tenure at an interest rate is 10% per annum. So, your monthly EMI would be around ₹8,333, or you can pay ₹1,10,000 in a lump sum, along with any foreclosure charges.

Picking the right tenure is essential to plan your finances and handle repayments smoothly.

Bajaj Markets provides short-term and long-term gold loans with flexible options, allowing a tenure of up to three years. The choice between these options depends on your financial situation, repayment capacity, and future plans. Understand the differences thoroughly and select one based on the EMI. 

1. Short-term Gold Loans

The tenure typically ranges from a few days to a year. This is suitable for individuals who require quick funds and can repay them within a short period. The key benefits of short-term gold loans are:

• Short-term gold loans carry less risk, so the interest rates tend to be lower

• Those expecting funds soon can opt for a short-term loan to clear the debt quickly and avoid prolonged repayments

• As the tenure is shorter, the overall cost with interest remains comparatively low

2. Long-term Gold Loans

The tenure for long-term gold loans usually ranges from 1 to 3 years. This is beneficial for those who require a larger amount and can commit to a longer repayment period. A stable source of income is necessary to manage repayments effectively. 

The primary benefits of a gold loan with a longer tenure are:

• A longer repayment period results in lower monthly payments, making financial management easier

• Lenders often offer more flexible terms for long-term gold loans

• Smaller monthly instalments reduce the risk of default

Consider the following factors before you choose your ideal gold loan repayment tenure:

• Affordability

Assess your monthly income against expenses, ensuring that the chosen home loan tenure results in manageable EMIs.

• Repayment Capacity

Use the free gold loan EMI calculator available on Bajaj Markets and calculate out the amount you may need to pay every month. This will simplify your budget planning. 

• Interest Rate Impact

It is important to be aware of the prevailing gold loan interest rates as they impact loan repayment. Longer tenure can translate to higher interest rates, while shorter tenure can come with lower interest rates.

• Financial Goals

Align your loan tenure with your overarching financial objectives. Ensure that it complements your long-term plans without impeding other financial aspirations. 

• Loan-to-Value Ratio

Larger sums may necessitate longer tenures for feasible repayment, whereas smaller loans could be settled more promptly. Hence, this impacts your overall interest costs.

Here is a list of gold loan lenders available on Bajaj Markets and the maximum repayment period they offer:

Use these strategies to ensure you do not default on repayments:

• Understand Your Loan Terms: Be aware of the loan amount, interest rate for gold loan, tenure, and fees to avoid extra charges or penalties.

• Opt for Regular EMIs: Pay fixed monthly instalments to manage repayments effectively.

• Make Partial Prepayments: Use extra funds to reduce the outstanding amount and lower the payable interest.

• Consider Bullet Payments: Pay both principal and interest in one lump sum at the end of the tenure.

• Set Up Auto-Debit: Automate EMI payments to prevent missing due dates.