Gold loans have always been a popular way to borrow money due to their simplicity, lack of documentation, quick availability of finance, and range of repayment alternatives. Having actual gold might serve as an investment or a backup for an unexpected financial catastrophe.

Borrowers can use their gold as collateral to borrow the principal amount based on its purity, weight, and current exchange rate. The interest rate and loan tenure can be different for each gold loan provider. Borrowers can choose a repayment arrangement that best meets their needs.

There are four main repayment options for the gold loan. These are all discussed here in the article. Read about the gold loan repayment options now.

Common loan repayment options:

• Pay the interest amount as an EMI and the principal amount in the end of the loan:

This option allows you to pay the interest amount using the lender’s EMI schedule. The principal can be paid in a single installment at the conclusion of the loan term. Borrowers choose this choice because they do not have to worry about repaying the principal throughout the term.

• Partial payments and foreclosures:

Making partial payments or paying the entire principal and interest amount before the duration benefits borrowers in two ways. They can repay the gold loan based on their financial situation. Borrowers have more flexibility because there are no fixed EMI schedules. 

Furthermore, if the entire loan is paid up before the end of the term, borrowers can save significantly because the interest on the remaining term will be waived. Foreclosure occurs when the entire principal and interest sum is paid before the end of the duration, and the loan is closed. This option is ideal for borrowers who want to save money on interest and recover their pledged gold as soon as possible.

• Pay the loan’s principal amount and interest amount as regular EMIs during the loan duration:

This option is best suited for individuals with fixed monthly earnings. The EMI of the gold loan comprises both the principal amount and the interest amount. This option operates similarly to most home or car loans, with borrowers paying a portion of the total principal and interest amount as EMI each month during the term.

• Bullet repayment:

For bullet gold loan repayment, the borrower must pay the entire loan’s principal amount and interest amount at the end of the gold loan period. Borrowers do not have to worry about adhering to an EMI schedule or making partial payments throughout the term. Usually the rate of gold loan interest is calculated on monthly basis.

The total principal and interest amount that is due at the conclusion of the tenure is paid in one payment. So, it’s known as bullet payback. You can calculate the gold loan interest amount using the gold loan repayment calculator. 

The repayment time for gold loan finance is usually short compared to other loan options. The maximum length is 12 months and 36 months for the EMI program. It is critical to choose a payback period because interest rates rise with the length of tenure. EMIs, bullet payback, partial repayments, and foreclosure are some of the several methods for repaying gold loans. The EMI option for the gold loan allows you to repay the gold loan by making regular payments to the lender over a certain period of time.