Gold loans have become a lifesaver for many people due to the growing cost of living and the emergence of unforeseen bills. Access to gold loans has become simpler because of digitization and online payment apps. While having access to gold loans so quickly is advantageous, it’s crucial to use these loans carefully. Gold loans can assist you in navigating the current financial crisis while also assisting in the development of your creditworthiness if used with caution and in conjunction with a clear plan to repay on time. With MobiKwik, you can now make gold loan payments online in a matter of seconds from the comfort of your home. A few advantages of gold loans are pointed out below:
- Lower interest rates
- Ease of application
- Great in an emergency
- Customized loan repayment schedule
Why Is Repayment of Gold Loans Important?
Gold loan repayment should be carefully treated because it affects your credit history, in addition to lowering your loan liability and accrued interest. The immediate financial consequences could range from increased interest charges for late installment payments to a bankruptcy filing in the event of failing to repay altogether. There are also long-term consequences for your credit history and your credit health.
What Is the Loan Repayment Procedure?
Paying back a loan involves returning the borrowed funds to the lender along with any accrued interest. In most cases, the repayment plan entails a set procedure known as a loan payback schedule in the form of EMIs. You can use fast, secure and hassle-free online payment apps like MobiKwik to repay your loans on time while enjoying various benefits like CashBack, SuperCash, etc.
How can repaying a gold Loan Affect Your Credit Score?
Several factors have an impact on the status of your credit. If you have made each IIFL gold loan payment on time and have never missed an installment, it is an indication of good repayment history. Some borrowers are unaware that all other banks can see their credit history with one bank on their credit report. Credit bureaus, like CIBIL in India, gather this information from many sources and make it available to banks upon request in the form of a credit report and credit score. Banks employ this technique to evaluate a borrower’s credit standing before authorizing a loan.
Financial Institutions view you as a risky consumer if you have a poor payback history. As a result, they may decide to reject your loan application or charge you a higher interest rate because they perceive a risk in your ability to repay the loan on time.
How Can Repaying Debt Improve Your Credit Situation?
You now know how even an inconsistent IIFL gold loan payment might damage your credit score. On the other side, making on-time payments allows you to establish a solid credit history and repair damaged credit.
Borrowers having a track record of on-time repayment may be more appealing to lenders. Depending on your lender, you can get offers all year round or just during specific times. If you pay your EMIs on time for a prolonged period, you may receive offers for low-cost loans. High credit limits and gift cards are among the options that your lender may offer.
With all of this, you can accept more loans to meet your needs and at better offers and interest rates.
Benefits of Making Timely gold Loan Repayments
Planning your repayments is crucial for the following reasons:
Reduce Late Payment Fees: Late payment fees are assessed when a gold loan is repaid after the due date has passed.
Prevent Asset Loss: If you don’t make payments on gold loans for an extended time, they may consider you to be in default on loan and may thus decide to sell your assets to collect the debt.
Avert Legal Issues: If you don’t return your gold loan following the terms outlined in the loan sanction letter, they may launch a lawsuit.
Your ability to manage your monthly finances and maintain or improve your credit score are both aided by prompt loan repayment. You have various options for repaying loans via online payment apps, and you can select the one you trust the most. The interest rate on the repayment amount varies depending on the application and is determined by whether the qualifying requirements are met.