Gold Loan

What is the Process of Gold Loan Repayment?


Are you planning to apply for a loan? Do you have gold that can be kept as collateral? If yes, you are eligible to get approval for the loan.

Indians have a special connection with gold, which drives them to assemble gold jewelry, coins, and bars. Indians generally think of gold as an investment rather than an expense. When immediate cash is required, many families pledge gold to banks to get a loan against the security.

A gold loan is a loan taken against any gold jewelry, bars, or coins that range between 18 and 24 carats. The gold can be pledged as collateral with the bank to borrow money. It is a type of secured loan for the bank. Generally, people between the ages of 18 and 75 are eligible, but this may vary as per the terms and conditions of the lender.

In this article, we will look at the process of gold loan repayment in detail.

How to Repay Gold Loan?

The gold can act as collateral with a bank or an NBFC until full repayment of the loan. The gold loan amount and interest rate change over time, depending on the bank.

Borrowers have several options for paying back the principal and interest after opting for a gold loan. Each one of them is described in detail below.

1) Pay EMI as interest and principal at the end

The borrower must repay the interest accrued on the loan, as calculated by the EMI schedule and provided by the lender. The borrower, on the other hand, can pay off the principal in a single payment. This principal payment will be due when the loan expires. Borrowers can generally choose this method of repayment because it allows them to pay only the interest during the repayment period of the gold loan and save the principal for the end.

2) Bullet repayment

A bullet repayment plan requires the borrower to repay the loan’s principal and interest at the end of the term. The borrower will not be responsible for any gold loan repayments. You can pay off the loan in full without following any EMI schedule when the term ends. The loan’s interest is calculated monthly but is only payable at the end of the term. This type of gold loan repayment is called a “bullet repayment plan” because you pay off the entire amount at once.

3) Partial payments

If borrowers decide to repay their gold loan using this method, they are not required to adhere to the EMI plan provided by the lender. Partial interest and principal payments are available whenever they desire. You can therefore modify your repayment schedule to suit your financial situation. If you choose to pay the principal amount immediately, your total interest pay-out, which is computed daily on the loan amount that is still outstanding, is decreased. As a result, you spend far less on serviceable interest.

4) Regular EMI

For salaried people, a regular EMI-based gold loan repayment might be the best option. In this kind of repayment, the total EMI amount is inclusive of the interest and the principal amount. The loan is approved more quickly because salaried people have advantages over others.

5) Pre-closure option

There may be instances where you have enough cash in hand to pay your gold loan ahead of schedule. If you wish to repay your gold loan early, then well-known financial institutions like Piramal Finance will accept full repayment of gold loans.

These are the five main options that borrowers have while repaying the loan. They can choose any of the options with which they are comfortable. Each option comes with different terms and conditions for different banks and NBFCs.

What Should You Consider While Opting for a Gold Loan?

Borrowers should be aware of their needs before considering a gold loan. To make the best choice for the borrower and their family, they must conduct thorough research on everything from gold loan EMI payments to reputable financial institutions. Before taking out a gold loan, they should take some time out of their busy schedule to complete the necessary tasks.

The holiday season is the ideal time to take out a gold loan with a manageable repayment schedule. A low-interest rate will be an advantage for you. Additionally, during Indian festivals like Diwali and Dussehra, gold items tend to appreciate. Due to this, Piramal Finance and other reputable financial companies will be able to offer borrowers a better gold loan payment option.

What are the Benefits of Opting for a Gold Loan?

  • Less Paperwork: As a gold loan is secured, it can be processed quickly with the least amount of paperwork.
  • Flexibility: You have the freedom to use the loan for any kind of expense, as there is no end-use monitoring.
  • Secured Loan: You are only required to give the lender the pledged gold jewelry when applying for a secured loan.
  • Lower Interest Rate: The interest rates are lower than those for personal loans as gold is used as collateral.
  • Quick Approval: As a gold loan has secured status, it can be processed quickly with the least amount of paperwork. Gold is a largely inactive asset that is rarely used to make money. Therefore, a gold loan is an ideal way to raise capital and use the money when you need it to meet your financial obligations. Additionally, it is safer in a bank’s or other financial institution’s locker than at your house.


The option you choose for loan repayment should be a well-thought-out decision that should be taken after closely examining your ability to make loan repayments. You can consult any lender at Piramal Finance before making any decision. They will assist you in determining the best repayment option for you based on your monthly earnings. They will guide you through the entire process, making it very simple.