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Have you taken a gold loan? Choose a gold loan repayment option based on your cash flows

Wed Oct 28 2020

 

 

Buying gold jewellery has been an age-old tradition in Indian families. Other than buying jewellery during marriages, Indians also buy gold during auspicious occasions like Dhanteras and Akshay Tritiya. There is a belief that buying gold brings prosperity to the family. Like real estate and fixed deposit, gold is another asset that Indians prefer to buy as they can mortgage it to borrow money in case of a financial crunch.

 

Getting a loan against gold is not only easier but also cost-effective. The interest rate on a gold loan is less than the interest rate charged on personal loans or loans against credit cards as it is a secured loan. One can get gold loans within 30 minutes. Also, you get multiple repayment options.

 

1.     Pay interest as EMI & principal later

Through this option, you can repay the interest amount as per the EMI schedule of the gold loan however the principal amount borrowed is to be paid, in full, at the time of maturity.

 

2.     Bullet repayment

In bullet repayment, the bank charges interest on a monthly basis, but it will become due for payment along with principal only at the end of the loan tenure. It is suitable for short-tenure gold loans of six months to one year. You need not service EMIs in this type of gold loan; just pay the entire due amount at the end of the term in a single shot, hence the term bullet repayment.

 

3.     Making partial payments

In this repayment option, you can make partial payments to your gold loan lender whenever you have sufficient savings. Any lump-sum amount from selling dud investments or annual bonus from the employer can be used for the purpose. You don’t need to service the EMI schedule in this repayment option. The lenders allow you to make partial or complete payments of both the interest and principal components, irrespective of the pre-set EMI schedule.

If you repay your principal initially, then your total interest pay-out, which is usually calculated daily on the amount of loan outstanding, is bound to reduce. This way you can save on a lot of serviceable interest.

 

Regular monthly EMIs

This is a standard loan repayment option catering mainly to the salaried class that has monthly cash inflows. The repayment of principal and interest will commence from the month following the month of disbursement.

 

Source: https://www.timesnownews.com/