What happens if I am unable to pay back my gold loan

Learn about the auction process for your jewellery in the event of a loan default.
What happens if I am unable to pay back my gold loan
2 min read
28 Oct 2022

A gold loan is a secured loan that is offered to you against your gold jewellery, to assist you in meeting your financial needs. But there may be situations when you may be unable to make your loan payment on time because of unforeseen circumstances.

When this happens and a gold loan goes unpaid for an extended period of time, the amount is recovered by auctioning the gold that you pledged.

Here is how this process takes place.

Reasons for the auction of your gold jewellery

There are two instances for conducting an auction:

  1. If you default in payments as per the loan repayment schedule or fail to pay the margin money as per the gold loan terms.
  2. In case there is a decrease in the rate of gold fixed during the loan application process.

Steps of the auction procedure

  1. Default notices
    Even after multiple texts and phone calls, if there is a delay in the scheduled repayment, a notice is sent to your home. The first default notice is sent 15 days after a delay in repayment.

  2. Pre-auction intimation notice
    After multiple intimations, reminders, and the default notice, if you fail to clear the dues, you receive an auction intimation notice. The company sends this notice 21 days after the initial default notice.

  3. Advertisement for conducting the auction
    An advertisement is published in two newspapers – one in local newspapers and the other in a national daily.

  4. Day of auction
    In accordance with a set industry guidelines, the auction takes place.

  5. Documentation of auction event
    A record of the complete auction process is duly maintained for further reference of all parties involved.

  6. Delivery of gold jewellery
    The successful bidder gets the gold jewellery they have purchased within 3 working days.

After the conclusion of the auction, you receive all details pertaining to it. If there is a surplus or deficit amount received by the company, an intimation is sent to you in the form of a letter.



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