How to repay gold loan through credit card?
Gold loans have significantly gained popularity in the last few years, especially during the pandemic. What makes gold loans unique among all financing options is their easy availability and eligibility, flexibility of fund usage, quick processing, and multiple repayment options. Furthermore, affordable gold loan interest rates are one of the best features of this credit option.
Read on to know how you can repay your gold loan through credit card.
Steps to repay gold loan through credit card
There is no question of denying that gold is an important financial asset in terms of investment source and growth. Choosing a gold loan in India is one of the best ways to manage financial emergencies. This credit option is accompanied by easy eligibility requirements, which means that anyone can apply for this loan by pledging their high-value gold jewellery as collateral.
Moreover, it is easy to pay off gold loans as the valuable collateral enables lenders to impose competitive gold loan rates in comparison to other unsecured loan types. Besides, a loan against gold ensures faster processing and involves minimal documentation. Since gold loans are convenient to process and approve, financial institutions have come up with multiple repayment options. Although repayment options tend to vary across lenders, it is essential to have prior knowledge about the repayment methods so that you can select the most appropriate one for you.
Pay interest at regular intervals and principal on maturity
This is the first repayment option for gold loan where you can pay off interest at regular intervals (monthly/quarterly/yearly) and repay the entire principal amount at the tenure’s end. You can choose the interest payment interval by assessing your financial capability. Such a provision is beneficial for you as you do not have to worry about principal repayment throughout the tenure and are only liable to pay off the interest component. Thus, before applying for the loan, you must thoroughly research and compare gold loan interest rates offered by lenders and select the one that suits your repayment capacity.
Making partial payments
Adhering to the EMI schedule is not necessary for this kind of repayment schedule as you can make partial payments of both principal and interest components whenever you desire. This is purely a customer-centric approach for gold loan customers. Irrespective of the pre-fixed repayment pattern, you can pay off partial or complete payment of both interest and principal components. If you choose to repay your principal sum initially, then the payable interest that is calculated based on the loan outstanding significantly reduces. In this way, you can save substantial serviceable interest.
Bullet repayment
In this method of repayment, you can choose to repay the overall amount of both principal and interest amount at the tenure’s end. Therefore, you do not have to worry about the repayment throughout the tenure. Besides, you are not required to follow the instalment schedule and can repay the entire amount when the loan tenure ends. Although the interest amount is evaluated each month, it is payable only when the tenure ends. Since the entire repayment is made in a single shot, it is known as a bullet repayment plan.
Traditional EMI method
This traditional method of gold loan repayment is customised for salaried individuals with a stable income source. In this method, the EMI includes both principal and interest components and is paid every month.
In general, gold loans do not have any lock-in periods and are accompanied by shorter tenures. Therefore, individuals opting to pay gold loans online can choose any repayment methods that suit their financial capacity.
Furthermore, to ensure hassle-free repayment throughout the tenure, you can take the help of a Gold Loan EMI Calculator to determine the payable interest beforehand and manage your finances accordingly. By having prior knowledge about the EMIs, you can measure your financial liability and choose loan amount based on your financial standing.
You can choose to repay both the principal and gold loan interest component in any of the above-mentioned methods with the help of a credit card. However, you must plan your repayment carefully and pay credit card bills on time to avoid a debt trap.