When it comes to repaying a gold loan, there are several popular methods you can choose from. These include interest-only EMIs, monthly EMIs, bullet payments and more. Check out the details about the various gold loan repayment options.
When repaying a gold loan, borrowers have to pay back the principal amount borrowed along with accumulated interest. There are various repayment options you can choose from.
Monthly EMIs
This option involves regular monthly payments covering both the principal and accumulated interest. Individuals with a consistent monthly income can conveniently select this method, making fixed payments to the funding institution.
Interest-only EMIs
Here, only the gold loan interest amount is paid monthly. The principal amount is settled in full at the end of the loan tenure, alleviating the immediate burden on the borrower. This approach allows borrowers to manage the principal repayment during the loan tenure, making the repayment hassle-free.
Bullet Repayments
The bullet repayment option enables borrowers to settle the entire loan amount, along with accrued interest, at the end of the gold loan tenure. This offers the advantage of accumulating the total amount and repaying it without the need for monthly or interval-based repayments.
Partial Principal Repayment
Borrowers can choose to pay interest based on a repayment schedule that suits them, while making partial repayments of the principal amount throughout the loan term. This mode allows borrowers the flexibility to repay the principal and interest. This choice provides the opportunity to minimise overall interest costs.
Loan Foreclosure
This refers to the process of closing a gold loan ahead of the original tenure period by making a full and final principal payment along with all the accrued interest and charges owed. This choice allows borrowers to settle the outstanding amount ahead of time, providing flexibility and potential savings on interest costs.
FAQs on Gold Loan Repayment
Can I repay the gold loan early?
Yes. You can choose to repay the pending loan amount before the tenure ends. However, some banks or NBFCs may charge a penalty for the preclosure of the gold loan. So, read all the clauses and terms properly before you borrow a loan.
What happens if the gold loan is not paid?
If you fail to repay the gold loan on time, the lender will confiscate your gold articles kept as collateral and have them auctioned. Legal actions may also be taken against the borrower if the complete loan amount is not received by the funding institution.
How can I pay back the gold loan?
Gold loans can be repaid through fixed monthly EMIs, covering both principal and interest. Alternatively, opt for interest-only EMIs, paying only interest monthly, with the principal settled at the loan's end. For added flexibility, consider partial principal repayment, allowing you to repay principal and interest as per your convenience within the loan tenure.
What are the charges on gold loan repayment?
Gold loan repayment charges vary among lenders and may include interest, processing fees, late payment fees, collateral assessment fees, insurance charges, appraisal charges, and foreclosure penalties. Carefully review the loan agreement and disclosure documents provided by the lender to understand the specific charges applicable to your gold loan.
