Due to the better rates and flexible repayment choices offered by gold loans, they are becoming more and more popular with consumers. Borrowers are eligible for loans up to 90% of the gold’s market value. Additionally, processing takes place in less than a day. A gold loan rate is not the same as an ordinary installment loan, where you make a monthly EMI payment.
There are various options for repaying a gold loan
Pay principal at maturity and interest as EMIs:
Regular interest payments help you lower the overall cost of interest on your gold loan. You can just pay the principal in one lump payment at the loan’s maturity and get your gold back. Your monthly EMI won’t be excessive because you are simply paying the interest portion, therefore you can easily manage it. This kind of repayment is appropriate for start-up companies with limited cash flow.
Regular Interest and Principal Component Repayments:
Although this is not a defined EMI payment schedule, you agree to make recurring payments of a certain amount toward the outstanding principal and interest. Some people want to pay off a loan in one large sum over time. That is also effective. The key in this situation is to make sure that you are routinely servicing the debt to avoid significant interest buildup.
Definitely a customer-focused strategy for gold loans! The interest and principal components may be paid in full or in part, regardless of the set EMI schedule. If you pay off your principal first, your total interest payment, which is normally calculated daily depending on the amount of the loan outstanding, will inevitably drop. This will save you a tone of additional interest.
Bullet Repayment Option:
With gold loans, this is by far the most preferred method of repayment. At the conclusion of the loan term, you pay back the principle plus interest in one lump sum. As a result, there are no monthly payments required. Simply pay back the loan and get your gold from the bank at the same time. Only loans with short repayment terms, typically between six and twelve months, are eligible for the bullet repayment plan. However, they are highly helpful for start-up enterprises that require a sizable initial investment in finance.
The interest and principle components of a standard EMI plan:
This is the simplest method of paying back your gold loan. This strategy is comparable to other methods of repaying installment loans. Once you have repaid a fixed EMI for a predetermined period of months, your loan is paid off. Your gold is returned to you after the loan is paid off. This is a stress-free method of repayment. Just set up an ECS or NACH mandate for monthly EMI debit on your bank account. You pay the EMI on time and avoid paying expensive late fees or fines. You have paid off the loan on schedule and are now debt-free.
One can prepay the majority of gold loans whenever you wish because they don’t have prepayment penalties or a required minimum lock-in period. Gold loans have short payback durations; the majority have lengths of no more than five years, and the average term is no longer than one year.
