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Gold Loan Repayment Options: Bullet Repayment vs EMI

Disclaimer: This blog contains generic information only. For Ujjivan SFB Gold Loan repayment-related queries, please contact the bank.

July 23, 2025

gold-loan-repayment-options-bullet-repayment-vs-emi

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Gold loans are gaining traction, especially because of its simple eligibility criteria, affordable interest rates compared to personal loans and quick disbursal process. With a gold loan, you can get quick access to funds by pledging gold as collateral. However, before availing of a gold loan, it's essential to understand the repayment options available. In this article, we will discuss two common methods of gold loan repayment – bullet repayment and Equated Monthly Installments (EMI) – and help you determine which one you should incorporate for better financial planning.

Gold Loan Repayment Methods Explained

When considering a gold loan, borrowers have several loan repayment methods, each with distinct features and benefits. Understanding these options can help borrowers choose the best fit for their needs.

1. Bullet Repayment

Bullet repayment is a method where you repay the entire principal amount along with interest at the end of the loan tenure. It is called "bullet" because the repayment happens in one go – more like lumpsum payment.

Let's understand this with an example:

Suppose you take a gold loan of ₹1 lakh with an interest rate of 10% for six months. At the end of the term, you repay the entire ₹1 lakh plus ₹5,000 in interest. This means you make a single payment of ₹1,05,000 at the end of six months.

Bullet repayment is suitable when you have a lump sum amount coming in at the end of the loan tenure, such as an annual bonus or investment maturity.

2. Equated Monthly Installments (EMI)

EMI is among the popular loan repayment methods for repaying various types of loans, including gold loans. It involves paying fixed monthly amounts that include both the principal and interest components.

Let's take the same example as above

Suppose you take a gold loan of ₹1 lakh with an interest rate of 10% for six months. Instead of making a lump sum payment at the end, you choose to repay through EMIs. Using an EMI calculator, the monthly installment would be approximately ₹17,500 (₹1,05,0006). EMI repayment is suitable when you have a steady income and prefer to spread out your repayments over a longer period. Now that we have understood both methods let's compare them in different scenarios.

Gold Loan Repayment Methods: Some Examples

Scenario 1: Salaried Individual

Rohan is a salaried individual who has taken a gold loan for emergency medical expenses. He receives a bonus of ₹50,000 at the end of six months and plans to use it to repay the loan. In this case, bullet repayment would be more suitable for Rohan. He can repay the entire amount in one go when he receives his bonus, saving on interest payments throughout the loan tenure.

Scenario 2: Business Owner

Priya runs her own business and has taken a gold loan to meet working capital requirements. She expects regular cash inflows from her business throughout the loan tenure. In this case, EMI repayment would be more suitable for Priya as it allows her to manage her monthly cash flows effectively.

Summary Comparison: Different Gold Loan Repayment Methods

Feature	Bullet Repayment	EMI Repayment
Payment Structure	Single payment at end of tenure	Fixed monthly installments
Interest Payment	Accumulated until maturity	Paid monthly along with principal
Financial Flexibility	High (no monthly payments)	Moderate (fixed obligations)
Total Interest Cost	Potentially higher	Generally lower
Ideal For	Short-term needs, irregular income	Steady income earners

Final Thoughts

When it comes to gold loan repayment, both bullet repayment and EMI options have their advantages and suitability depending on individual circumstances. If you have a lump sum amount coming in at the end of the loan tenure, bullet repayment can be a good choice. On the other hand, if you prefer spreading out your repayments over a longer period, EMI repayment is ideal.

To determine which option is best for you, consider your financial situation, income stability, and availability of funds. It's always wise to calculate your EMIs in advance using online calculators and determine the feasibility of repayment for better financial planning.

Get Gold Loans up to ₹25 lakh at attractive interest rates with Ujjivan Small Finance Bank. Enjoy quick disbursal and a stress-free loan journey. Apply now!

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The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.

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FAQs

1. Are there any prepayment charges for gold loans?

Prepayment charges vary across lenders. It's important to check with the lender about any applicable charges before availing of a gold loan and for better financial planning.

2. Can I avail a top-up loan on an existing gold loan?

Yes, many lenders offer top-up loans on existing gold loans based on the value of additional gold pledged.

3. What happens if I default on my gold loan repayment?

If you default on your gold loan repayment, the lender has the right to auction off the pledged gold to recover the outstanding amount.

4. Can I change my repayment method from bullet repayment to EMI or vice versa?

Some lenders may allow you to change your gold loan repayment methods during the course of the loan. However, this is subject to their terms and conditions.

5. Which are the two popular gold loan repayment methods currently?

One of the most popular loan repayment methods is currently the EMI option. However, bullet gold loan repayment method is also increasingly being sought after, especially where borrowers expect a lump sum.

6. Can I extend the tenure of my gold loan?

Some lenders may allow you to extend the tenure of your gold loan subject to certain terms and conditions. It's best to check with the lender regarding their specific policies for better financial planning.

7. Which option is better if I have irregular income?

If you have irregular income, bullet repayment might be more suitable as it provides flexibility in repayments based on your financial situation.

8. Can I get a higher loan amount with EMI repayment?

With EMI, you can typically avail a higher loan amount as the repayment is spread over a longer tenure, making it more manageable.

9. What happens if I am unable to repay the bullet amount at the end of the loan tenure?

In case you are unable to repay the bullet amount, you may have to extend the tenure or opt for alternative repayment options like converting it into an EMI-based loan.

10. Are there any prepayment charges for bullet repayment?

Prepayment charges may vary across lenders. It is advisable to check with your lender regarding their policies on prepayment charges.

Gold Loan Repayment Options: Bullet Repayment vs EMI