Are you Looking to Settle your Gold Loan? Here are Four Ways to Ace it

Settling a gold loan efficiently is crucial for maintaining financial stability and protecting your valuable assets. Whether managing unforeseen expenses or responsibly clearing debt, employing effective strategies can greatly impact your financial well-being.

This blog delves into four effective methods to settle your gold loan efficiently, providing practical advice and straightforward guidance. Understanding these approaches ensures a seamless loan closure, securing your financial well-being for the future.

What is Gold Loan Repayment?

As the name suggests, gold loan repayment is the process of paying back the loan, along with the interest accrued on the amount and any charges levied. Once the gold due is cleared in full, the lending institution gives back the pledged gold.

The borrowers can set up the loan repayment process at the time of taking the loan based on their requirements. It is integral to ensure that the loan repayment happens timely to maintain a good credit score for the future.

There are different ways to pay back the gold loan. You can pay it back in full, divide the payment into monthly EMIs, foreclose the loan, or pay only the interest initially and the principal amount later. With Shriram Gold loan, you can avail of a gold loan at affordable interest rates and get varied loan repayment options.

4 Effective Ways to Repay Gold Loan

Broadly categorizing, there are 4 ways to repay the gold loan depending on the financial stability of the borrower. These include:

1. Pay Interest as EMI & Principal later

This method allows you to pay the interest accrued on the loan amount in EMI instalments as set up by the lending institution. The principal amount is paid off in a single payment at the maturity of the loan. This is an easy repayment option for borrowers with no worry about paying the principal amount immediately.

2. Make Partial Payments

This is a relatively flexible mode of payment under which you are not obligated to follow the EMI payment schedule of the lending institution. Make partial payments of the interest and the principal amount according to your financial stability and convenience.

 If you end up paying a major part of your principal amount at the beginning of the loan, then the interest accrued will be minimized. However, if the principal amount is paid later, then the interest amount to be paid gets increased.

3. Bullet Repayment

This is another gold loan repayment method under which you are not required to pay the principal or the interest in instalments. Pay the principal amount together with the interest rate at the end of the loan tenure. The interest is accrued for the entire period for which you have the loan but is paid only at the end. Since all the dues are paid in one shot, it is known as the bullet repayment.

For example, the total loan amount is ₹1 lakh for 12 months at an interest rate of 5%. In this case, the total interest will be ₹5,000. The entire amount of ₹1,05,000 will be paid at the end of the loan tenure.

Calculate your gold loan interest rate with Shriram Gold Loan calculator

4. Regular EMI Option

This repayment option is best suited for individuals who have a fixed monthly income. Under this method, the principal amount and the interest amount are paid together in instalments. As a result, the amount accrued gets distributed in easy instalments. This loan is ideal for salaried professionals and gets fast approval.

How Does the Gold Loan Repayment Method Affect the Interest Paid?

While different methods available to repay the gold loan, the interest accrued by following these procedures is not the same. With added convenience also comes the added cost of borrowing. 

By opting for a regular EMI option, you promise to repay the loan in instalments which minimizes the lending institution risk. As a result, the interest repaid is typically lower in this repayment option. 

In the case of infrequent payments or bullet repayments, the interest accrues over the entire period, and hence the total interest to be paid is higher compared to other options. Lastly, when paying a part of the principal amount right in the beginning, you can lower your interest significantly. 

Paying less initially can help meet other financial requirements; however, it builds a burden for the future due to compounding of interest. Therefore, choose a repayment option wisely that matches your financial capabilities and do not forget to consider the interest rate. 

Consequences of Delayed Gold Loan Repayment

Some of the consequences of not paying the gold loan repayment are:

• Lending institutions will contact the borrower through calls, texts, and emails if they do not pay the gold loan on time.
• Failure to repay may result in penalties imposed by the lending institution.
• Since this is a secured loan, if the loan remains unpaid, the institution may auction the gold deposited as security.
• The institution will notify of the auction process; if the debt remains unpaid, they will sell the gold to recover their funds.
• This can negatively impact the CIBIL™ score, making it harder to secure loans in the future or resulting in higher interest rates.

Conclusion

Enquire about the varied loan repayment options at the beginning to ensure that you make an informed decision and choose an option that suits your requirements. You can avail of gold loans with Shriram Finance at affordable interest rates and meet your financial requirements. With quick loan disbursals and assured gold security, get optimum gold loan deals. 

So what are you waiting for? Check the gold loan interest rates today and fund your financial requirements immediately with Shriram Finance.