Different Ways of Repaying Your Gold Loan
Different Ways of Repaying Your Gold Loan
A gold loan is a secured loan, so you’ll only get your ornament back if you repay the loan amount on time. And there are so many options provided by the banks. So let’s have a look at some common repayment structures used by borrowers to repay the loan amount.
Gold loans are the process of getting funds by pledging your asset at any bank or NBFC (Non-Banking Financial Companies). Borrowers have to repay the amount given by the bank along with the interest rate.
Banks give customers the flexibility to choose a loan repayment structure and tenure according to their budget, income, and capacity. So it’s essential to calculate your expenses according to your income and then choose a repayment structure.
There are a number of repayment structures provided by the bank. So it’s essential first to check your repayment capacity and then choose a structure accordingly. You can use various online tools like gold loan rate per gram calculators.
Let’s first take a look at some common factors that can be used to make your repayment process more manageable.
- Reduce your loan tenure:- It’s advisable to reduce your loan tenure as short as possible. Because you’ll have to pay the interest rate along with the principal amount, and choosing a long loan tenure will lead to you paying more money as the interest rate. Let’s explain this with an example:- If your loan amount is 5,00,000 and the loan tenure is 32 months with an interest rate of 10%. Then you’ll pay INR 4,346 as EMI every month, which may seem very low. But the total interest rate that you’ll pay is INR 11,68,938, which is double the loan amount that you’ve borrowed.
- Pay more EMI:- You can try to pay more money as EMI even if it’s by increasing the EMI amount you’ll pay by INR 2,000–5,000. This will help you to pay off the complete loan amount quickly.
- Manage your funds:- Banks check how responsible you are for repaying the installments. It’s essential to manage your funds beforehand so that you won’t face any problems afterward. You can calculate your expenses and manage them. Deduct all the unnecessary spendings for a while.
- Choose a bank that will provide a low interest rate:- There are a lot of banks and NBFCs that provide gold loans at low interest rates. So you can compare all the options available in the market and then choose an ideal one according to its SBI gold loan interest rate, charges, LTV rate, etc.
Repayment options provided by the bank
Get Kamal Deep’s stories in your inbox
Join Medium for free to get updates from this writer.
There are numerous repayment options that are provided by the bank.
- Regular EMIs:- This option is usually centered on salaried individuals. In this option, you’ll have to repay the loan amount in small EMI’s along with the monthly interest rate until the entire principal amount is paid off.
- Interest Rate in EMI’s:- In this option, you’ll have to repay the monthly interest rate in EMI’s and pay the entire loan amount at the end of the month. This option will give you time to collect funds to repay the principal amount, while you’ll have to pay interest rates in EMI.
- Prepayment:- If you want to avoid paying interest rate, then you can pay the entire principal amount in the initial stage. For example:- You currently need funds immediately, but you’ll get your salary after four days. So you can get funds instantly now and repay the amount in prepayment in 6 days.
- Partial prepayment:- You can 50% of the principal amount at the initial stage. And the remaining principal amount at the end of the loan tenure along with the interest rate.
- Bullet repayment structure:- You don’t have to follow the EMI structure to repay the loan amount. You can quickly repay it at the end of the loan tenure using the bullet repayment option. But you’ll have to repay the entire principal amount along with the interest amount.
Conclusion:-
There are a lot of repayment options available in the market. So do thorough research on all the options and then choose your ideal repayment option.
Author Bio:-
Thanks for stopping by and checking me out. I’m Kamal Deep, a writer, blogger, and author with over 2 years of writing experience. I’ve published so many articles in online publications; blog posts. Being a part of this field for a long time now, I have written many informative articles and blogs benefiting and assisting many in this field. And this article is all about repaying your Gold Loan, which clarifies all your quires regarding loans.
