Gold loans have always been a popular choice for borrowing funds because they offer you a convenient process, require minimal documentation, provide quick disbursal, and offer a variety of repayment options. When comparing a personal loan to a gold loan, you will find that a personal loan takes days or even weeks to avail, while a gold loan can be approved within hours. This is because you can use your gold as collateral against the loan amount. Additionally, gold loans typically have lower interest rates compared to personal loans.
Banks and financial institutions offer different gold loan repayment methods. You have the flexibility to choose from various options such as regular EMIs or bullet repayments, allowing you to repay the loan in a way that suits your financial situation.
Let’s look at the different modes of gold loan repayment to assist you in selecting the right one for your needs.
Bullet repayment
In bullet repayment, you have the option to repay your gold loan in a single payment at the end of the loan tenure. This means you can repay the entire loan amount, including the principal and interest, all at once. Bullet repayment is a suitable choice if you have the financial capacity to make a lump sum payment.
However, it is crucial to ensure that you have the necessary funds to make the bullet repayment on time as agreed. Failing to do so may result in penalties or other consequences for defaulting on the loan.
Interest-only repayment
Here in this interest-only repayment method you can manage your loan obligations effectively. With this approach, you can make periodic payments towards the accruing interest, while the loan principal remains outstanding until the end of the loan tenure. This allows you to focus on repaying only the interest portion for the duration of the loan, and you can settle the loan principal amount in full at the end of the tenure.
Flexible interest payment with partial principal repayment
You have the opportunity to choose a customer-centric repayment option that offers partial principal repayment and flexible interest payment. With this option, you can repay the principal amount in instalments throughout the loan tenure, while having the flexibility to adjust the interest payment according to a schedule that suits you.
This repayment approach provides you with relief from the burden of a fixed monthly liability throughout the entire tenure. By focusing on repaying a significant portion of the principal during the initial stages of the loan, you can effectively reduce your overall interest liability, regardless of the gold loan interest rate.
EMI repayment
If you opt for EMI repayment, you will have the opportunity to repay your gold loan through fixed monthly instalments. These instalments cover both the principal amount and the interest, and they are spread out over the loan tenure.
EMI repayment is a popular choice among gold loan borrowers because it offers a structured repayment schedule, making it easier to manage your finances and plan ahead. It is important to carefully assess your monthly cash flow and ensure that the EMI amount is affordable and fits within your income.
You can use the Bajaj Finance Gold Loan Calculator to determine your monthly instalments based on factors such as the loan amount, interest rate, and tenure.
Choosing the right gold loan repayment option is vital for a hassle-free borrowing experience. Whether you opt for bullet repayment, EMI repayment, or an interest-only repayment option, consider your financial capabilities, preferences, and long-term goals. This will help you make an informed decision and select the most suitable gold loan repayment option for your specific needs.
Visit the Bajaj Finance website to apply for a gold loan today.
