How Can You Repay Your Gold Loan Efficiently?

One of the biggest reasons for choosing gold loans over gold savings accounts is that they provide borrowers with the flexibility to convert their gold holdings into cash at any time without any hassle. Most lenders allow prepayment option without any charges or a minimum lock-in period.

Gold loans are a convenient way of getting cash quickly in moments of need, but as with all loans, it is important to repay them on time. Repaying a gold loan involves repayment of the loan amount along with all the interest due and charges that the lender might levy. Essentially, a gold loan account stands closed when the borrower deposits the outstanding loan principal amount and interest amount.

Ways to repay a gold loan

At present, payment methods of Muthoot gold loan include the choice of redemption at maturity or foreclosure. Therefore, if you have applied for a gold loan and need a longer repayment duration, it is recommended that you choose to repay on maturity.

Periodic EMI:

This is the most preferred option among gold loan applicants. In this mode, the equated monthly instalment (EMI) includes both the interest and principal amounts. The borrower pays half of the principal amount at the beginning of each month and another half (interest-only) at the end of each month.

Pay interest via EMI and principal later:

EMI is an effective method of repayment by which a borrower can pay a lower amount at regular intervals, paying over a period of time as much as the interest on his loan, and a lump sum money as the principal. Thus, EMI allows borrowers to pay only the interest amount and delay paying the full principal until maturity.

Partial payments:

When economic circumstances change, sometimes it’s best to catch up on missed payments by paying off your interest and principal amounts ahead of schedule. Some lenders offer payment options that let you make partial or even complete payment of your EMI, regardless of the scheduled date.

Bullet repayment:

Bullet repayment is a simple arrangement of repaying the entire payment in one go, at the end of the loan’s tenure, and hence, earning money through easy gold loans. The monthly interest and the principal amount are paid only when the term ends. It’s obvious that EMIs are not relevant in this type of gold loan repayment.

Gold loan is short time investment facility. Sometimes due to unexpected circumstances, a borrower may not be able to pay the loan on time. However, if the borrower repays back the amount within 30 days of the maturity date, there are no penalties for the delays. The interest rate charged on gold loan is competitive and easy to understand without any hidden charges.

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When one fails to repay loans

At the end of the loan tenure, the bank or a non-bank financial institution hands the collateral gold back to the borrower without deducting any interest from the total amount.

After the loan tenure, usually 7 years, the bank or a non-bank financial institution will restore the collateral gold to the borrower and obtain his/her acknowledgment.


The loan specialist sends standard suggestions to the borrower through instant messages, calls, messages or letters. These updates are about the sum due and the repercussions of not reimbursing the gold credit.


Missing reimbursement could bring about a punishment going somewhere in the range of 1% and 7%. The punishment relies upon the sum and the deferral from the due date of the gold advance reimbursement. This rate isn’t connected with the standard gold advance loan fee.


The final retreat for banks to get the credit is to sell or hold a public closeout of the guarantee, in the event that the borrower disregards the updates and doesn’t reimburse the credit. Commonly, loan specialists illuminate the borrowers about the sale and the expenses of completing the interaction.