When you don’t pay Gold loans we know the loan amount is the cash offered to the borrower by money lender with no collateral security along with interest. If we talk about Gold Loan then this loan resides in the category of secured loans in which your avail loan by pledging your gold ornaments. After evaluation of your gold, the banks sanction your Gold Loan amount. Keep in mind, your loan sum will be based on the current market value of your gold.
A borrower can face these consequences When you don’t pay Gold Loan
In case you haven’t paid the loan then the first step taken by the banks (NBFCs as well) is giving your notices and reminders. Being a borrower if you failed to pay your first two instalments then the bank will consider it as late payments but if you attempt the same with your third instalment then you will receive a notice or reminder (under SARFAESI Act 2002) from the bank. If your payments remain pending up to 90 days then it will count as NPA (Non-Performing Assets) and if once this option takes place then being a borrower you will see no doors to take future actions. That’s why banks mostly recommend thinking wisely before applying for Gold or any loan. Availing Gold Loan may take few minutes but when it comes to paying monthly EMIs then you may face several obstacles so, this important once take a glimpse at your expenses, income, and other money-related issues and then apply. It’s also compulsory to comprehend the repayment policy, tenure, and the interest rates and then choose the bank.
1. Legal actions by banks – Despite sending notices and reminders if still, the borrower gives no response; he/she will face legal action from the bank’s side in which the borrower will get the legal notice. Instead of ruining your credit history, CIBIL and reputation either think before availing a loan, make timely payments or at least get in touch with a bank or respond to their notices. If you face any obstacle in paying monthly EMIs then contact the bank, they can help you out in expanding your tenure.when you don’t pay gold loan banks to have legal right to take legal actions
2. Affects your CIBIL Score – When you don’t pay Gold Loan on time then your CIBIL Score will get affected. It will impact your credit history negatively, it means your CIBIL score will get a decrease.
3. Penalty – Usually, banks or NBFCs put a penalty on the delayed payments. This mostly happens in unsecured loans because a moneylender does not have any alternative to recover from collateral. When you don’t pay the gold loan you have to face penalty charges.
4. Asset /Collateral (Gold) – This one is the final step by banks. If the borrower is not giving a response to the above-given actions then banks choose its last option in which money lender owns the borrower’s gold’s rights. This is common if we’re saying collateral means the condition is clear if the borrower returns the loan sum at a time then pledged gold will get back to its real owner but if not then the bank has the authority to sell that gold for recovery.
So these are the consequences when you don’t pay the gold loan at a predetermined time