What Are Different Modes Of Gold Loan Repayment?

By Author: Arjit Chalmela
Total Articles: 14
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A gold loan is one of the most popular loan options for people. Ever wondered why it is so much in demand? Under this type, gold ornaments, coins or biscuits are given as collateral in exchange for funds. With minimum documentation and quick disbursal of funds, it draws several customers, especially in smaller cities and towns.

If seek to apply for a gold loan, the application procedure is extremely simple. You need to take the physical gold to the lender. They carry out an independent verification of the gold and its purity. Once done, it disburses funds based on the loan to value. This means the percentage of value is given out as a loan. Lenders do not give the entire gold value to the borrower.

The best advantage of such loans are the different repayment modes available. Before you apply for gold loan, you can check with the lender about the repayment modes. You can also check the EMI amount using a gold loan EMI calculator. The instrument is available for free on the lender’s website. Clarify the EMI amount and repayment mode before you get this loan.

Regular EMI repayment:

Every lender offers this standard repayment option. Here you repay through monthly instalments. The instalment includes both principal and interest payment on outstanding funds. You need to find the EMI amount using the gold loan calculator. This is the most standard type of repayment.

Monthly interest payment:

Here the interest gets repaid monthly till the end of the loan repayment period. However, the principal amount is paid at the end of the term. You can use the calculator to find out the total interest amount that has to be paid in such a case.

Principal repayment at the end of tenure:

In this type of repayment, the total interest is taken upfront. On the other hand, principal repayment is done at the end of the loan tenure.

Sporadic repayment:

There is no fixed EMI here. The repayment amount is not fixed. The borrower can repay the loan against gold in installments of differing amounts. However, the ornaments, coins or biscuits put up as collateral are only released on full payment of loan amount. The lender is obligated to keep these under lock and key.

Bullet repayment:

Under such a loan, there are no repayments made for the duration. Both the principal and interest amount are repaid at the end of the loan tenure. For instance, if the loan tenure is 12 months, the entire principal and interest are paid at the end of the month. The payment is neither due nor paid before the tenure ends. However, the interest rates rise to compensate for the time the funds are with the borrower.

Before you apply for a gold loan, be sure to check the monthly instalment amount from the gold loan calculator. Also, do clarify whether lenders offer an alternative mode of repayment. If any other mode of repayment is convenient and you have a good repayment ability, you can negotiate with the lender for the same.