The gold loan also referred to as a loan against gold, is a secured loan that a borrower takes from a lender in lieu of gold ornaments such as gold jewelry. The loan amount sanctioned by the bank is a certain percentage of the gold's value. You can repay it through various repayment modes offered by the banks and the tenure is also decided by the comfort of your choice. Unlike other secured loans, there are no restrictions on the end-use of gold loans. So whether you want to plan a trip or pay medical bills, it is a great way to meet your sudden money requirement. Moreover, a lot of private and nationalized banks along with NBFCs offer affordable gold loans interest rates.
Gold loan tenure
The prepayment periods or gold loan tenure varies from one lending institution to another. It usually ranges from 3-12 months. Depending on a case, some lenders even offer a longer tenure or allow you to renew it in order to extend the tenure. Since the tenure of the gold loan is shorter in comparison with other types of loans, make sure you repay the loan amount on time. Defaulting on gold loans may lead to losing your gold articles and decrement in the CIBIL score too.
Gold loan repayment
Following are a few options available with the lending institutions to repay the loan:-
Most lending institutions let you pay only the interest amount each month and the principal amount at the end of the loan tenure.
You can choose to pay your gold loan through EMIs ( Equated Monthly Installments ), which will include both the principal and interest components of your loan.
You can also make partial payments. This option lets you repay the loan without getting bound to a fixed amount of EMI. You can pay the principal amount and interest both.
One can also opt for bullet repayment schemes where you repay the lump sum amount of principal rate and interest at the end of the loan tenure. Note that the bank calculates the interest on a monthly basis but you pay at the end of the tenure. This option is generally used for short-term loans, typically those for 6 months.
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