Gold is a financial asset that is passed down through generations. It is an asset that has readily come to the rescue in case of any financial emergency. Although times have changed, gold has retained its sentimental and monetary value among Indian households. Today, people have the opportunity to apply for online gold loans when in need of money.
Gold loans are secured loans in which borrowers can obtain funds by putting their gold ornaments as security. The simple application process and low-interest rates with flexible repayment options have led to increasing demand for loans among borrowers. Additionally, a borrower can use a gold loan calculator to determine the suitable EMI depending on the interest rate and the loan duration that is convenient to pay.
However, you may experience financial difficulties repaying your gold loan due to unplanned events. In such a case, this article might serve as a guide to assist you in efficiently managing gold loans.
Here are three basic strategies for properly managing gold loan repayment.
The bullet repayment method allows you to pay back the entire principal amount plus interest at the end of the loan term. This is particularly useful if you have taken the loan in the event of a financial emergency and are convinced that you will soon be able to bounce back and generate enough funds to repay the loan in full.
The lender would levy interest each month on the principal in this method, but the capital and interest accrued would be payable at the completion of the loan term. Bullet repayment is especially advantageous for short-term borrowing spanning six months to 1 year.
This strategy frees you from EMI repayment schedules and allows you to focus on your current goals during the loan term, as you must pay the loan amount at the end of the period. However, before taking out the loan, employ a gold loan calculator to figure out how much you’ll have to pay back after the loan term.
Some lenders may allow you to make prepayments on your gold loan. This prepayment is in addition to the previously agreed-upon EMI schedule. The payment thus made helps you reduce the overall debt burden, making debt repayments more manageable. As a result, anytime you have garnered additional money from any prior investments, dividend payouts, or other sources, making small prepayments on your gold loan is recommended. Moreover, lenders do not charge borrowers any additional fees for prepayments.
This repayment option allows you to make monthly payments of solely on the interest component on the principal amount of your loan as per the set EMI. The main component does not have to be paid in monthly instalments. Instead, you can make a single payment to pay off the principal amount at the end of the loan term. As you do not have to include the principal amount in your monthly payment, the EMI is more manageable and easy to pay without any fear of default.
This repayment option is appropriate for borrowers with insufficient monthly cash flow or regular income to cover both the interest amount and principal components. During the loan term, the borrower is required to pay the interest. A gold loan calculator can help you figure out how much interest you’ll have to pay each month.
Gold loans are a realistic solution to all of your financial problems. Furthermore, the measures listed above can assist you in better managing your loan payments. So, if you have a financial emergency or are establishing or expanding a business, you can benefit from gold loans available at attractive interest rates. The best part is that you may apply for gold loan online rather than visiting a bank branch in person.