What is Gold Loan part release facility & how does it work?

Gold Loans have always been a convenient way to access funds quickly, using your gold assets as collateral. However, the need to retrieve a portion of the pledged gold before the full loan repayment can be essential for many borrowers. This is where the Gold Loan part-release facility comes in, offering a flexible solution.

How does the Gold Loan part-release facility work?

Here's a step-by-step example to illustrate how the Gold Loan part-release facility works:

1. Assessment and loan disbursement:

You pledge 100 grams of gold, valued at ₹6,000 per gram.
The total value of your gold is ₹6,00,000.
You receive a loan of ₹4,50,000, keeping in mind the loan-to-value ratio set by the lender.

2. Partial repayment:

After a few months, you manage to accumulate some savings and decide to repay ₹1,35,000 of your loan.
Given the initial loan amount, this repayment represents 30% of the total loan.

3. Release of gold:

With the part-release facility, you can reclaim a corresponding portion of your gold.
Since you have repaid 30% of the loan, you can reclaim 30% of the pledged gold, which is 30 grams.

By using the part-release facility, you not only reduce your outstanding loan amount and interest but also get back some of your valuable gold before the complete repayment of the loan.

Benefits of the Gold Loan part-release facility

Flexibility: The Gold Loan part-release facility offers flexibility by allowing you to reclaim a portion of your pledged gold with each partial repayment. This means you don't have to wait until the entire loan is cleared to access your assets. Instead, you can steadily retrieve your gold, which can be particularly beneficial if your financial needs change over time.
Enhanced financial management: This facility significantly improves your ability to manage finances by giving you the option to unlock part of your gold assets whenever necessary. Whether you need to meet unexpected expenses, invest in new opportunities, or simply want to regain possession of some of your gold, this feature supports your financial agility and responsiveness.
Interest savings: One of the most attractive benefits is the potential for reduced Gold Loan interest costs. By repaying portions of your loan early, you decrease the principal amount on which interest is calculated. This can lead to substantial savings over the life of the loan, as interest is only charged on the remaining outstanding amount. Thus, early partial repayments not only help you regain your gold but also lighten your financial load.

Also Read: 5 ways to manage your gold loan repayment

Wrapping up

The Gold Loan part-release facility is an excellent tool for managing your gold assets efficiently while maintaining liquidity. By understanding how the Gold Loan part-release facility works, you can leverage this feature to reclaim portions of your gold as you make partial repayments, enhancing both flexibility and financial control.

Axis Bank further enhances this offering with high-value Gold Loans ranging from ₹25,001 to ₹40,00,000, quick loan disbursal within 60 minutes, and flexible repayment tenures ranging from 6 to 36 months. With straightforward Gold Loan eligibility criteria, Axis Bank ensures a seamless and convenient borrowing experience. Moreover, competitive Gold Loan interest rates make borrowing cost-effective, and minimal documents required for a Gold Loan ensure a hassle-free application process.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.