How Can You Save On Gold Loan Repayment Using Digital Payments
A gold loan is the cheapest form of short-term personal loan one can avail, provided one owns gold jewellery or gold coins in cases when one is borrowing from a bank.
Borrowers need to pay back not just the principal amount but also the interest rate, which is basically the price of the loan. Once repayment is complete, the gold article is returned to the borrower and the loan account is closed.
Repayment
For the repayment process, one can opt for the conventional mode of going to the branch and paying each month, depending on the repayment schedule.
The other—and easier—mode of repayment is digital. Borrowers can download the associated apps of their lenders and make their regular equated monthly installments (EMI) via various payment modes.
Digital Repayments Help Save Money
The most basic way a digital repayment option helps a borrower save money is by saving the time and money involved in travelling to the branch and queuing up to pay the EMI.
But that’s not the only advantage of paying back via the digital option. Many lenders offer repayments via digital wallets or UPI-based apps. These wallets and payment modes, such as Paytm, Mobikwik and PhonePe and Google Pay, have their own offers for payments. Once a borrower uses one of these apps, they have a chance of getting other offers and even cashbacks, which in effect work out as discounts on the actual money paid back. This reduces the actual payment amount, albeit marginally.
Another significant way one can save while paying back digitally is the option to pay back a sum from their surplus cash instantly. This allows a borrower to reduce the principal due and thereby the total interest outgo at the end of the loan tenure.
Most lenders charge a small fee for early closure or foreclosure of a gold loan. However, this also depends on the tenure and the time when the repayment is made. For instance, lenders charge a nominal fee only if the repayment is done within the first three months of the loan.
If one has taken a one-year gold loan and has landed a surplus cash after four months, he/she can easily take advantage of the digital payment process and repay all of the outstanding and cut the interest cost. This is especially beneficial as the digital repayment process makes it easier to do so. In cases where one has the money to repay but needs to go to the branch to repay, inertia may prevent a borrower to save money.
Key Takeaway
One can opt for a traditional mode or a digital way to pay back a gold loan. The digital repayment option comes with several ways for the borrower to save money, be it via offers on payment partners, ease of pre-payment or by saving the time and cost of travel to the branch to make physical repayments by cash or cheque.
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