How a bullet repayment gold loan works
In a bullet repayment gold loan you hand over your gold, receive the loan and make no payments during the term. At the end you pay the loan and all the interest together, and you get the gold back. Because nothing is repaid along the way, the whole loan earns interest for the whole term.
Interest on these loans is usually simple: the loan times the yearly rate times the time in years. Some lenders instead add unpaid interest to the loan each month, which costs a little more. The calculator shows both, with simple interest as the starting choice. Your loan documents say which applies to you.
Lenders also look at how much the gold is worth against what you will owe. If your lender counts the interest due at the end towards its loan-to-value limit, a bullet loan can be smaller than a simple limit times the gold value suggests. The calculator shows the most you could borrow with that interest counted.
Worked example
Borrowing ₹1,00,000 at 9.9% a year for 6 months on simple interest costs ₹4,950.00 in interest, so you repay ₹1,04,950.00 at the end. That is an effective annual rate of 10.15%, because the whole loan stays outstanding for the whole term.
With interest added to the loan each month instead, the amount due is ₹1,05,053.22. Gold valued at ₹1,50,000 puts the amount due at 69.97% of its value, and a 75% limit with interest counted would allow a first loan of up to ₹1,07,193.90.
Another case: gold worth ₹1,00,000 and a lender limit of 75% do not allow a ₹75,000 loan if interest at 12% for 12 months must fit inside the limit. The most you could borrow is ₹66,964.29, because the loan plus a year of interest is then ₹1,12,000.00 at most.
To estimate what your gold is worth, use the gold loan amount calculator.
If you cannot pay at the end
If the loan is not repaid when it falls due, the lender can usually renew it or sell the gold to recover the debt. Ask what interest must be paid before a renewal, how long you have after the due date, and how any surplus from a sale is handled. This calculator shows the cost of one term only and does not model renewals.
Rules for gold loans in India are set by the Reserve Bank of India and by each lender, and they change. The page does not apply any rule for you, which is why the loan-to-value limit is a number you enter from your lender's quote.
To see whether a single-payment gold loan is the cheapest way to borrow, try the gold loan vs personal loan calculator.
Inputs for the bullet repayment gold loan calculator
Loan amount
The amount the lender pays out against your gold.
Interest rate
The rate on your quote. The rate shown is only an example, so enter your own.
Rate is quoted
Choose per year or per month to match your quote. Banks usually quote yearly rates.
Term
The months until the single payment is due, from 1 to 60.
Interest is worked out
Simple interest is rate times time. Compounded monthly adds unpaid interest to the loan each month.
Value of your gold
What the lender values your gold at. The gold loan amount calculator can estimate it.
Lender's loan-to-value limit
The most the lender lends as a share of the gold's value. Use the figure on your quote.
CALCULATOR QUESTIONS
Bullet repayment gold loan calculator questions
What is a bullet repayment gold loan?
A gold loan with no payments during the term. You pay the loan and all the interest together at the end.
Is a bullet gold loan cheaper than monthly instalments?
Not necessarily. The whole loan stays outstanding for the full term, so at the same quoted rate it costs more than a loan repaid in instalments. Compare the effective annual rate.
Does the interest count towards the loan-to-value limit?
Some lenders count the interest due at the end. The calculator shows the most you could borrow if yours does. Check your loan documents.
What if I cannot repay on the due date?
The lender may renew the loan or sell the gold. Ask about renewal conditions before you borrow.