What happens if I can't repay a gold loan?
If you are unable to repay a gold loan taken from a bank or financial institution, you face the direct loss of the pledged gold ornaments or jewelry used as collateral. Lenders hold a legal security interest in the physical gold and will issue multiple overdue reminders, demand notices, and grace period extensions as the repayment deadline lapses. If the borrower fails to clear the principal and accrued interest by the final stipulated date, the lending institution exercises its statutory right to auction off the gold in the open market to recover the outstanding dues. Any surplus money remaining after the auction sale and administrative expenses are settled is refunded to the borrower, but a shortfall can still result in negative credit score impacts and further collection efforts.
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