Gold Loan Repayment with Credit Card

Maximize your credit card rewards and manage your gold loan payments with ease. Learn how to repay your gold loan using a credit card and take advantage of the convenience with these payment method!

8 Feb,2023 12:22 IST 2835
Gold Loan Repayment with Credit Card

Gold is a strong financial asset. Although people buy gold jewellery for sentimental or ornamental purposes, in case of financial emergencies they can avail a loan by mortgaging the asset.

Indeed, gold loans are increasingly becoming popular due to their easy availability, affordable rate of interest, faster processing, flexibility of fund usage, multiple repayment options and not too strict eligibility criteria.

In fact, the borrower can repay the gold loan even with a credit card. However, repaying the gold loan through a credit card may not be as convenient as other option and it may come with extra charges, too.

What Is A Gold Loan?

A gold loan is a secured loan procured against gold ornaments. Almost anyone can avail the loan by mortgaging the gold. Since it is a secured loan, it carries a lower rate of interest than personal loans. The loan amount depends on the purity and prevailing market value of gold. On repayment of the loan, the borrower gets back the gold items pledged.

Gold Loan Repayment Options

There are various options to repay gold loans. While most borrowers would want to repay the loan through their monthly incomes and savings, some situations might require them to use their credit cards to pay back the loan. Here are a few options how a person can use a credit card to repay the gold loan.

1. Pay Interest As EMI and Principal At The Time Of Maturity

In this repayment mode, the borrower can use the credit card to pay only the interest in monthly installments as EMI during the entire tenure. The principal is paid in full at the time of maturity. Borrowers choose this mode of repayment because it relieves them from the burden of principal repayment. Since only interest is being paid through EMIs, the amount of EMIs can be adjusted according to the paying capacity of the borrower.
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2. Make Partial Payments

A borrower can choose to repay the principal and the interest amount on a regular basis as partial payments. This is a customer-centric approach. The customer can make the partial payment as per the financial capabilities. An upfront payment of the principal amount will reduce total interest pay-out, which is calculated daily on the outstanding principal amount. This way one can save substantial serviceable interest.

3. Bullet Repayment

This repayment mode allows the borrower to pay both the principal and interest at the end of the tenure. The interest is calculated every month but is payable only at the time of maturity. Since the repayment is made in a single shot, this mode of repayment is known as bullet repayment.

4. Regular EMI Option

Catered towards salaried persons, regular EMIs are calculated for those who have a stable monthly income. The EMI includes both the principal as well as the interest amount and is paid every month.

In general, gold loan do have any lock-in period or prepayment penalty. Thus, the borrower can pre-pay the loan as and when desired. These loans have short repayment tenure, with a majority having a term of five years and an average term of not more than a year.


An individual can choose to repay the principal and interest amount of gold loan by any of the methods mentioned above. In case the lender’s terms and conditions allow, the borrower can repay the loan with the help of a credit card. In general, credit cards may add an additional charge. So, borrowers using a credit card to repay their loan must clear their credit card bills on time to avoid falling into a debt trap.

Most importantly, prospective borrowers should take out a gold loan only from well-respected lenders such as IIFL Finance. The company not only offers at affordable gold loan rate of interest rate but also customises the repayment terms to help borrowers repay the loan without any burden. Moreover, IIFL Finance gold loan process is customer-oriented and avoids any lengthy and time-consuming requirements.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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