5 Ways To Repay Gold Loan

Posted by Arjit Chalmela on August 1st, 2019

A gold loan is one of the most popular loan options for people. But what is a gold loan? In this type of a loan, gold ornaments, coins or biscuits are put up as collateral in exchange for funds. With minimum documentation and quick disbursal of funds, this type of loan is finding many takers.

If you’re looking to apply for gold loan, the loan application procedure is extremely simple. You need to take the gold to the lender. The lender will carry out independent verification of the gold and its purity. Once verified, it will disburse funds based on the LTV or loan to value. One important thing to remember is the LTV which is the percentage of the gold value which is given out as a loan. 

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

These are the 5 ways to repay a gold loan: 

1. Regular EMI repayment:

Most lenders have this type of repayment. In this, the repayment is made through a monthly installment amount. The installment consists both of the principal repayment and the interest payment on outstanding funds. This EMI can be found out using a gold loan EMI calculator. This is the most standard type of repayment.

2. Pay interest on EMI and principal at the end of repayment:

In this type of repayment, interest is paid monthly until the end of the loan repayment period. However, the entire principal amount will be repaid at the end of the loan. It is best to confirm the interest repayment amount from the lender before opting for this type of repayment.

3. Upfront interest payment and principal at the end:

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

4. No fixed installment:

This type of loan does not have any fixed installment. 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.

5. Bullet repayment:

In this type of loan, there are no repayments made for the loan tenure. Both the principal and interest amount are repaid at the end of the loan tenure. For example, if the loan tenure is 4 months, the entire principal and interest are paid at the end of 4 months. No payment is made before. However, the gold loan interest rate will be higher under this option.

Some lenders have a fixed repayment system whereas others give the borrower the flexibility to repay