9 Super Easy Ways To Repay Your Gold Loan
Gold is not just an ornament; it is a financial investment for many people. When you take a loan from lenders or banks by pledging your gold is known as a gold loan. Gold loans are used to overcome a financial problem or contingency. Gold loans are one of the easiest ways to arrange funds when in need, such as business deals, medical emergencies, travel purposes, study purposes, etc. Gold always comes in for rescue in case of a financial emergency or requirement. It is considered one of the best investment options for individuals.
One of the other reasons people opt for gold loans is the low-interest rates compared to banks’ traditional loans. Gold loans also provide you with an option for flexible repayment schemes.
There are various ways to pay your gold loan, unlike other loans. We have jotted down some of the super easy ways that you can use to repay your gold loans:
What are the Implications of Timely Repayment?
Timely repayment of loan has several positive implications for the borrower, some of them are discussed below:
- Boosts Credit Score : Sticking to loan repayment methods and timely payment can help a borrower increase their credit score. Credit score essentially signifies the risk associated with lending to a borrower. It is a measure which helps the lenders determine the loans’ terms and conditions, interest rates, repayment tenure, among many other factors. Healthy repayment boosts credit score which can help with securing future loans
- Decrease Debt Obligation : Timely payment towards loan repayment can help decrease the debt obligation on an individual, which can have a very positive impact on the net liabilities, of a person, and can help in securing better loans in the future, impacts the net worth, among many other factors
- Limits total cost of borrowing : Failing to do timely loan repayments attract several charges like late fees, default fees, among many others. Paying these fees and penalties can essentially mean that the borrower is paying a higher sum of money to utilize the borrowed funds, in other words increasing the total cost of borrowing. A debt is deemed attractive based on its cost of borrowing, a loan with high cost of borrowing is counterproductive and proves to be damaging to the financial standing of a person.
- Saves collateral : In case of gold loans, where one’s gold serves as a collateral to secure the loan, defaulting can result in loss of gold, as the lender may choose to liquidate the gold to recover the outstanding dues. This makes timely repayment even more imperative, as the borrower's asset is on the line. It is imperative that the borrower makes regular gold loan EMI payment and repay on time to avoid such situations.
1. Periodic Interest
One of the common ways to pay the gold loan is through periodic interest. It means that both the principal amount and interest amount will be kept separate from each other. You will be required to pay only the interest amount in equated monthly instalments, and the total principal amount can be paid on maturity. It is a suitable option for people who want to keep their monthly installments short.
This option is more suitable for people who don't have enough income or monthly cash flow to be able to pay both principal and interest amounts. However, paying only an interest amount increases the interest rate for every month. Before opting for the periodic interest method, borrowers are advised to consult with their lenders about the interest amount, cost, and options for repayment and select accordingly.
2. Periodic EMIs
Most gold loan borrowers prefer periodic EMIs. Borrowers are required to pay the loan amount from the month following the disbursement month. It is considered a suitable option for salaried people who have a monthly income flow. The monthly EMI includes both the principal amount and interest amount. It is a quick and easy repayment process of gold loans as it deducts from your account monthly.
You can also automate the monthly repayments if you prefer for easy payment. The periodic EMI option also helps reduce the liability of interest as the loan term progresses. The loan foreclosure gets easier after time.
3. Bullet repayments
One may have heard of the bullet repayment, but may wonder what is bullet repayment gold loan? - Bullet repayment is a method in which the borrower is required to pay interest and principal amounts at the end of the term of the gold loan. During the loan tenure, you are neither required to pay the interest nor the principal amount. You will pay the entire amount when the loan term is completed. It is known as bullet repayment because you pay the whole amount at once at the end of your loan term.
The interest is calculated for each month, but you will be required to pay the whole amount of interest along with the principal amount when the term ends. It is simple and doesn't put a monthly burden on the borrower.
4. Partial Payments
Another method to repay the gold loan is to make partial payments. You can make partial payments of the principal and interest amounts as per your needs and requirements. Following the EMI system is not important in this type of gold repayment method. You can set up your gold loan payment scheme online as you desire with your lender and make the payments wholly or partially of both the interest and principal amount.
5. Monthly interest in overdraft accounts
Another option for easy repayment of the gold loan is through an overdraft account. Many banks such as DCB Bank and SBI (State Bank of India) offer overdraft options against the pledged gold to the borrowers. In these accounts, the overdraft facility does not exceed the gold pledgeable value. These accounts act as transactional accounts, and people can pay the monthly interest per the account’s borrowing amount.
These are highly convenient for individuals with high capital requirements, and do not wish to pledge gold often. As these accounts cut down the requirement to physically pledge the gold time and again. You get an account with overdraft facility equivalent to the gold pledgable value which can be utilized for expenditure, and the interest amount is calculated based on the amount availed from the limit.
6. Life Insurance policy
Life insurance policy assists in paying the gold loan when the option of paying the total amount is loan interest and principal after the term. It gives you an opportunity to pay the principal amount after the term and interest every month, as or when it occurs.
7. Indiagold application
The indiagold app is transparent and reliable and easily downloaded through the play store. It offers a user-friendly and transparent experience to the customers to actively track and manage their payments making the process more convenient and hassle-free. This method will ease your process of repaying your gold loan and help you choose any method you like.
How the highly convenient repayment method helps is that it enables the borrower to choose the most convenient repayment method, allowing them to repay in a way which maximizes their utility out of the gold, and also gives them the headspace to repay the loan easily
8. Paying Interest Upfront
You can pay the interest on the gold loan upfront when it gets disbursed. Then, you repay the principal at the end of the tenure and get your gold back. The lender deducts interest on the gold loan from the loan amount and the rest of the balance amount as a loan. This gold loan repayment option is suitable for those borrowers who may find it difficult to make monthly repayments.
How gold loan settlement works in such cases is that, let's suppose you pledge your gold and avail a loan of INR X/- with a loan tenure of 1 year. And your total payable interest for a 1 year gold loan is INR Y/-. Using this method, the lender will deduct the INR Y amount from the INR X amount and essentially give the balance to the borrower i.e. INR (X-Y)/- . The borrower would be liable to repay INR X at the end of the loan tenure.
9. Flexible repayment
Repaying interest along with principal as per your convenience is an additional flexible option. This scheme provides the flexibility to pay according to financial capability but on the EMI schedule. You can make complete or partial payments of the interest and principal amount based on your cash flow.
Thus, we can say that there are various options that a borrower can opt for the repayment of the gold loan. The repayment has never been this easy. A variety of options allow borrowers to take gold loans immediately without any additional burden. They can repay the interest and principal amount as they like. They can select the tenure of the gold loan as per their requirements.
indiagold offers all these repayment options to the borrowers on gold loans. indiagold provides a quick release guarantee, low-interest rates, minimal documentation, and loan at home service facilities for easy gold loans.
Summary
Gold loans are one of the most in-demand quick money lending options available today. These loans are very flexible compared to regular personal loans available in the market. These loans are secured by gold, which is kept as collateral. The interest rates are very attractive and players like Indiagold offer exceptional loan deals. If paid on time, gold loans can help boost the credit score of the borrower, reduce debt obligations, and avoid extra costs like penalties and late fees.
Flexible repayment allows the borrower to choose terms of repayment that will fit their budget, making the gold loan easily accessible and convenient as a source of quick funds.
For someone wondering how to clear loan fast? There are various options on offer in the market by lenders like Indiagold!
Gold loan repayment procedure and options include Periodic interest, where only interest is paid monthly, Periodic EMIs that combine principal and interest, and Bullet repayments, which require full payment at the end of the term. Partial payments - As the name suggests, allow borrowers to pay as needed, while Overdraft accounts offer flexibility with interest payments. Other options include using Life insurance policies, Indiagold app for tracking payments, or Paying interest upfront with principal paid later.
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