The benefits of applying for a gold loan include a speedy payout, no restrictions on when, how and where the money is spent, and little to no weight given to the applicant’s credit score in the acceptance process. There are other options for repaying a gold loan, which is another aspect that is often not known or emphasized.
If you are curious, let’s find out.
Bullet repayment option
One of the most typical ways to repay a gold loan is through the bullet payment option. It allows the borrower to repay the entire loan balance, including the ICICI bank gold loan interest rate, at the end of the loan term. Lenders typically collect interest on a monthly basis. Gold loans often have periods ranging from three months to three years, although the “bullet” option typically has maturities ranging from one year to three years. If you are unsure of how much of your loan you will be able to pay back each month, the bullet repayment option may be the best choice for you. The “bullet repayment” option for an ICICI bank gold loan results in the greatest interest expense due to the simultaneous repayment of the loan’s principal and interest.
Monthly payments which only cover ICICI bank gold loan interest rate component
The loan’s principal isn’t due until the loan is paid in full, but interest is paid monthly in accordance with the EMI schedule. The borrower has just interest payments to make during the term of the gold loan. If you don’t have the disposable income or the regular cash flow to cover both the interest and the principle, this is the best alternative for you.
However, the interest rate will increase if the borrower doesn’t make monthly payments toward the principal. Borrowers who go this route for loan repayment should inquire with their financial institutions about prepayment options and associated fees if any. This would reduce the total interest paid during the life of the ICICI bank gold loan and make it possible to repay the principal in a single lump sum at the end of the loan’s tenure.
Upfront payment of only interest cost
ICICI bank gold loan interest rate is paid in full at the time of loan disbursement under this repayment plan. At the end of the loan period, you’ll have to pay back the gold loan’s principal. Interest is typically deducted from the principal balance due at the time of loan repayment. For borrowers who know they won’t be able to make regular payments during the loan’s term but would prefer a more affordable solution than a single lump sum, the option to pay interest upfront is a reasonable middle ground.
Gold loans, like most other loans, typically offer the standard EMI payment option. Total interest paid is less with EMI compared with other methods of loan repayment because principal and interest are both paid back over the life of the loan. Those who have a consistent income and budget can benefit the most from regular EMI.
To sum up, which payment option should you select?
Borrowers applying for a go for a gold loan should select a repayment plan that makes the most sense given their current financial situation and anticipated future earnings. Since many people’s earnings have been impacted by the current epidemic, non-standard EMI repayment choices, such as the bullet repayment option, can be helpful. The regular EMI option offers the lowest ICICI bank gold loan interest rate to repay ICICI bank gold loan, so it’s the best choice for people who know they’ll have a stable income stream.
Now that you know your possibilities for paying back a gold loan, it would be wise not to neglect these important considerations.
Total amount borrowed
The Reserve Bank of India stipulates that banks and NBFCs can only loan 75% of the value of gold to borrowers. Gold loans range from as low as Rs 1,000 to as high as Rs 10 crore, with most lenders offering between this range.
Gold loan interest rates are determined by a number of criteria, including the lender’s perceived risk, the loan-to-value (LTV) ratio, the loan period, the loan amount, etc. For instance, if the loan-to-value (LTV) ratio is high, the lender is taking on more risk and would likely increase the interest rate to compensate. Gold loans typically have interest rates between 7 to 29 percent per year (p.a).
Gold loans are often for shorter periods of time, anywhere from three to five years. Choose a loan term that results in a manageable Equated Monthly Installment (EMI) based on your financial situation. An online EMI calculator will help you estimate your monthly payment based on the loan amount, ICICI bank gold loan interest rate, and the term you enter. As the loan period lengthens, the EMI amount decreases, and likewise for shorter terms.
Gold loan processing fees might be a set rate or a percentage of the borrowed funds. A flat cost of Rs 10 may be charged by some lenders, while others may charge a percentage of the loan amount of up to 2%. You should think about the possible processing fee that the gold loan lender may demand before submitting your application. This charge can have a significant impact on the final cost of a loan, especially for larger amounts.
The Value and Authenticity of Gold
The ICICI bank gold loan‘s maximum amount is determined by the purity and quality of the gold pledged as collateral. Gold jewellery, coins, and other ornaments may be acceptable collateral depending on the lender; however, this is not always the case. Lenders also examine the pledged gold, either internally or through independent evaluators, and base the loan amount on the gold’s appraised worth and purity.
Summing it up, remember that although gold loans are quite popular in our country, all thanks to the pertaining popularity of gold itself, it is crucial to keep all the above-mentioned aspects in mind to get the best out of your gold loan deal.