How to Repay the Gold Loan Easily?

Gold Loan, an incredible policy offered by several banking institutes in India, has become a game-changer. An extremely sustainable and trustworthy way to obtain money- Gola loan has become a household policy name now. A gold loan (also called a loan against gold) is a secured loan taken by the borrower from a lender. By keeping their gold articles within a range of 18-24 carats as collateral. The loan amount provided is a certain percentage of the gold.

The gold that is pledged on loan may be either a financial asset, or monetary gold or non-financial, or non-monetary gold. It remains on the books of the gold lender. The lender holds back the market exposure risk arising from the variations in the market price of gold. The gold pledged as an asset may be on-sold by the borrower. People usually avail gold loans in cases of urgent monetary requirements. 

How to Repay the Gold Loan?

Now that we know what a gold loan is, here are 5 ways you can replay the loan in due time. 

1. Partial Payment

We all know how much it is advised to check for your monetary availability and soundness before applying for any loan because of the additional fees, down payments, and most importantly, the timely payment of EMI. A gold loan is an extremely advantageous loan, and one of the advantages is that the repayment is not quite rigid, unlike most other loans. Contrary to personal loans, where it is mandatory to pay the EMIs on time, gold loans do not follow a stringent EMI payment timetable. Here, partial payments of the principal amounts, as well as the interest rate on the gold loan. It can be made by an individual. This payment method is quite advantageous as the individual can significantly reduce his total interest payout by paying back the principal bit by bit at the beginning.

2. Regular EMI

The regular EMI option provided by gold loan policies is a very convenient and popular repayment method, especially among the salaried class. This type of repayment method is aimed at those people who receive a fixed amount in their bank accounts every month. Either through paychecks or some other type of investment. The EMI option constitutes the payment of both the principal amount as well as the interest. The regular EMI option is convenient and sustainable.

3. Interest paid as EMI and the principal amount later

Statistically proven, most of the customers who opt for a gold loan have a greater affinity towards this repayment method. Whatever interest on the gold loan is found to be calculated, the borrower can pay through quite a few easy installments. The principal amount can be paid back to the lender by the time the maturity date of the loan arrives. One thing to be kept in mind is that the principal amount is to be paid back in the entire amount. The best thing about this kind of arrangement is that the borrower does not need to put pressure on himself by paying large amounts of EMIs. This is because the principal amount can be returned at the end of the loan tenure.

4. Bullet Payment

Bullet payment is another pretty amazing scheme provided by gold loan policies. Here there are no EMIs and partial payment options. All that needs to be done by the consumer is- repay the entire amount. That includes the principal amount and the interest when the term of the home loan expires. Thus, it eliminates the hassles of making some payments on a regular basis. But, do keep in mind that the interest is calculated on a monthly basis. It has to be paid back at the end of the term of the loan, which can make it a huge amount. One thing to be noted is that this type of repayment should not be chosen. If there is even a slight chance that you cannot repay the entire amount by the end of the tenure. Check your financial stability and opt for bullet payment only.

5. Overdraft Accounts 

This is a repayment method offered by several banks, viz. State Bank of India, DCB et cetera. These types of accounts avail transaction facilities and interest needs. To be paid for every withdrawal from the account for repayment of the gold pledged at the bank. In an overdraft, money can be repaid to the bank, both fully and partially, whenever you want to. After repaying on the availability of the said amount of money, you can again withdraw money from your overdraft account. As per the requirement until the maximum limit of the overdraft is reached.

SBI gold loan can be one of the best choices when it comes to a gold loan.


Sakshi is a Financial Advisor who helps people with investments and help them to get more out of their investment.

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