Gold Loan is one of the most popular loan options among customers when they are in need of some urgent requirements. One of the reasons behind its popularity is the ease and convenience with which customers can get the loan amount. Customers just need to submit their Gold Ornaments and Coins and lenders will provide the loan amount against the overall price of gold. Your ornaments will work as security against the loan amount. This is the reason there are several people who ask this question about what happens if I am not able to pay the Gold Loan?
The question is pretty valid as customers want to be assured about the answer; they are putting their beloved ornaments against the loan amount. If you are also going to apply for a Gold Loan and are worried about this question, you should stop it as we will be telling everything about the situation when you are unable to pay the Gold Loan due to some unforeseen circumstances. If you want to have no doubt remaining in your mind, keep reading the post as we will explain everything. Steps that Gold Loan Lenders Take On Non-repayment As you know lenders provide Gold Loan at affordable interest rates ranging from 10% to 16% per annum. To repay the loan via flexible repayment options, customers get a tenure of 12 months to 84 months. But when the loan is not paid for a long time, customers will have to face some grave consequences. We are showing all the possibilities that can happen if you don’t pay a Gold Loan on or before the due date. Lenders will send Reminders and Legal Notice If a customer happens to miss three consecutive repayments, lenders send reminders about the repayment via various methods such as letter, call, SMS, email, etc. Till this time, the customer has the option to reset your repayment schedule if the lender agrees to. If the payment has not been made even after the reminder, the next option is the Legal Notice which will comprise information about the due amount, auction of gold, etc. Lenders will charge Penal Interest Lenders also charge additional interest on the loan overdue amount. This interest is known as the Penal Interest. The interest rate is over and above the normal Gold Loan interest rate. For example, if a customer has failed to pay the loan amount with interest and other charges on the due date or within the grace period given, lenders will charge a penal interest on the due amount. Due to the added interest, the repayment amount would be higher as compared to normal Lenders can auction the Gold If a borrower still hasn’t repaid the Gold Loan amount, the last stop is to make an Auction of the Gold Ornaments. The lender has all the right to sell or dispose of the ornaments in the Public Auction. The lender will do it only as a last step when the customer is not contacting the lender about the loan. The lender also informs the borrower about the auction date before the few days it is going to happen. Negative Impact on your Credit Score A lot of people have this misconception that credit score remains unaffected from a Gold Loan which is not true. Your credit score can be affected either positively or negatively after you have opted for a Gold Loan. Credit score will improve on paying the dues on time whereas it may affect negatively if you are not doing repayments on time. Continuously missed repayments can affect your credit score badly.
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Anika Sharma
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