What Happens When You Fail to Repay Your Gold Loan?
Published: Feb 23, 2023
A gold loan is provided by any banking or non-banking financial institutions as a financial mode to tide over any emergencies. It lets you meet any necessary financial obligations without any difficulties. There are several methods of repaying the loans through the EMIs paid on a regular basis. However, there are situations when the repayment of a gold loan gets missed. It is important to note that if the repayment is not done for a long time, it can have a negative impact.
Steps taken by Top Gold Loan Companies in India
Before the gold loan has been provided by a gold loan company in India, it is important for them to ensure that the individual has the ability to repay it. However, if a borrower is unable to repay the sanctioned loan amount, then the NBFC that granted the gold loan can take the following steps to ensure that they can recover the amount: –
1) Reminders for Repayment
The very first step that any of the top gold loan companies in India would take is to send reminders through various forms of communication like emails, messages, calls and other similar methods. The reminders would be providing you with information on how to repay the gold loan sanctioned.
2) Penalty for non-payment
The next step taken in order to recover the loan amount is to charge penalties. The penalty amount is decided by the gold loan company and is based on the EMI amount that is due starting from the day of the repayment due date.
3) Gold auction
If the gold loan repayment amount is not fulfilled even after repeated reminders, the gold loan company in India will be auctioning off the gold. It helps them in recovering the sanctioned loan amount after providing a notice period to the borrower. However, it is important to note that if the amount gained after the gold auction is inadequate, the NBFC that granted the gold loan can request the bank to proceed with legal measures to recover the remaining amount.
4) Lowered credit score
Although there is no relation between credit score and the sanction of the gold loan, failure in repayment can have a bearing on the same. Gold loan companies in India usually send a notice to the credit bureau regarding the failure of repaying the sanctioned gold loan amount. The credit bureau then informs all the NBFCs and banks. This affects the credit score and thus hampers the chances of applying for a loan in the future. In addition, if the loan were granted, the interest rates would be higher than the usual interest rate.
How Does Gold Loan Repayment Work?
The are many ways through which a borrower can avoid default on the sanctioned gold loan. Here’s what one should do: –
1) Discuss with your gold loan sanctioning company
It is important to discuss your situation with the gold loan company and try to find out how to repay the gold loan. By providing valid reasons, the borrower can ensure that there are options that can work the best. One can also request for extending the tenure for the repayment of the gold loan EMI or get the EMI reduced; this too will increase the loan tenure.
2) Prearrange for EMI Payments
Once the gold loan is approved, the loan repayment tenure should be taken seriously and the repayment amount should be paid before the due date. In case of any financial issues, it is helpful in increasing the sources of income and reducing expenditure in order to get a better understanding of how to repay gold loans.
3) Settlement of loans
At times, top gold loan companies in India can assist borrowers by providing them with the option of settling the sanctioned amount against the pledged gold articles. In such a situation, repayment for a part of the sanctioned gold loan amount is done by the borrower. While it may affect the credit score of the borrower, it is often seen as a sign of relief for the individual. However, as a disclaimer, this solution should be approached only in dire situations. As for the ways on how does gold loan repayment work, the points mentioned below can help: –
● Use an EMI calculator to set
● Increase gold loan repayment tenure to pay affordable EMIs
● Repay the principal and interest amount equally every month
● Choose the bullet payment method for gold loan repayment that allows you to repay the entire amount at the end of each month
● Always pay off the interest amount and ask for pre-closure options aside loan repayment amounts
Capri Loans is one of the premier NBFCs that provide individuals with a wide range of loans, including gold loans. We provide borrowers with the freedom to repay gold loans according to their convenience through interest payments at regular intervals, upfront interest payments or bullet repayment options. The borrower can repay their gold loans online or by visiting the nearest Capri Loans branch within this location.