What Is Bullet Repayment in a Gold Loan?
In bullet repayment, you pay only interest each month and return the entire principal amount in one lump sum at the end of the tenure. This differs from EMI-based repayment where both principal and interest are paid monthly in equal installments.
Lenders offering bullet repayment gold loans include Muthoot Finance, Manappuram Gold Loan, IIFL Finance, SBI, and many cooperative banks. Typical tenures range from 3 to 12 months.
Bullet repayment is common in agriculture gold loans where farmers need funds for a crop cycle and repay after harvest. It's also popular with traders and small businesses expecting seasonal lump-sum inflows. Use our Agriculture Gold Loan Calculator for farm-specific rates.
How Do You Calculate Total Cost of a Bullet Repayment Gold Loan?
The calculation is straightforward:
- Monthly Interest = (Principal × Annual Rate ÷ 100) ÷ 12
- Total Interest = Monthly Interest × Number of Months
- Total Repayment = Principal + Total Interest
For a ₹1,00,000 loan at 12% for 12 months: Monthly interest = ₹1,000, Total interest = ₹12,000, Total repayment = ₹1,12,000. With EMI, the same loan costs ₹1,06,619 total — saving ₹5,381. The difference grows larger with longer tenures.
When Should You Choose Bullet Repayment Over EMI?
Choose bullet when: You expect a definite lump-sum inflow (crop sale, invoice payment, maturity proceeds) before the tenure ends. Your monthly cash flow is tight but end-of-term liquidity is certain.
Avoid bullet when: You have regular monthly income. The tenure exceeds 6 months. You might need to roll over — refinancing a bullet loan dramatically increases total cost because you restart interest on the full principal.
Warning: If you fail to repay the principal at maturity, the lender can auction your gold — typically after 15–30 days of notice per RBI guidelines.