Gold proves to be a great opportunity to acquire funds in terms of emergency. Gold loans, especially by Muthoot FinCorp, offer flexibility in terms of repayment. You can choose to pay in bullet payments, part payments, or EMIs, depending upon your requirements and budget. But understanding these payment schemes is the key to enjoying a comfortable loan tenure. Here are they in detail:
1. Equated Monthly Installments
Equated Monthly Installments or EMIs are the most common method of repaying any kind of loan. Gold loan repayment can also be made by opting for EMIs. This is most suitable if you have a stable income. You can use a gold loan EMI calculator to calculate the exact amount to be paid as EMIs. People who prefer EMIs to repay their gold loans have a monthly inflow of funds from a stable source. You can customize your EMIs as per your own preference. The principal and interest payments as EMIs would start right after the disbursement of the gold loan. A gold loan EMI calculator would help you in a great way in understanding your EMIs and managing your expenses.
2. Bullet Payments
Bullet payments are one-time payments meant for a gold loan repayment. In this method, the lender would charge monthly interest on the principal, but the payment of the principal and interest would be due at the end of the loan tenure. Bullet repayment is suitable for short-term gold loans, lasting between 6 months and 1 year. This type of repayment method might seem a great option. But, by the time the loan tenure ends you will end up paying a lot more money in the form of interest with a bullet repayment method. Although expensive, this method might be suitable for people who do not have a regular inflow of income and cannot afford monthly payments. You can use a gold loan repayment calculator to know how much you would have to pay to keep an eye on your finances.
3. Monthly Payment of Interest
The monthly payment method of loan on gold is similar to EMIs, with only a minor difference. In this method, you only make monthly payments of the interest accrued on the principal amount every month. The principal is not paid monthly; instead, it is paid at the end of the gold loan tenure. To know the interest to be paid every month, you can use the gold loan repayment calculator. This way, you can be sure not to miss a single payment. This repayment method is also suitable for borrowers with low income or those who do not have a monthly inflow of funds.
4. Partial Payments
Another popular method of gold loan repayment is making partial payments of principal and interest. Partial payments stand for making lump-sum payments as and when you desire. This method is convenient for people who cannot make monthly payments regularly. The amount to be paid can be customized by the borrower, as per their financials. Through this method, you can save money on your loan by making larger payments at the beginning of the loan tenure, decreasing your interest.
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Foreclosure stands for paying the complete loan amount before the loan tenure ends. Gold loan repayments can also be made by making pre-closure payments. You can pay your full loan amount before the actual payment date arrives. This repayment method reduces the interest and the total cost of the loan. If you pay the full amount at the beginning of the loan tenure, the interest for the rest of the time period is reduced. For example, if you acquire funds during your tenure, you can easily pay off your gold loan and take your gold home instantly.
In conclusion, repaying your gold loan does not have to be a stressful task. Choose the most suitable method of gold loan repayment and enjoy a hassle-free gold loan with Muthoot FinCorp.