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| September 2, 2022

Defaulted on your Gold Loan EMIs? Here are 4 Things You Should Do Now

Gold loans are secured loans where customers take loans from NBFCs and banks by pledging their gold jewellery as security. The loan provided against the gold is based on its current value in the market Gold jewellery should be ranging from 18-24 karats to get a loan from the bank. Borrowers with low credit scores can also apply for this loan since it is secured in nature. Moreover, repayment of gold loan EMIs can be done conveniently as per the loan tenure you choose.

Here are 5 things that may happen if a borrower were to default on gold loan repayment:

  • Based on the amount of the loan and the due date for the loan repayment, banks or lending institutions can charge penalties if the borrower has defaulted on his gold loan EMI.
  • Constant reminders should be expected from the lender’s end via calls, text messages and E-mails if you are failing to pay your gold loan payments on time.
  • If borrowers fail to clear their loan EMI within the tenure of the loan, then they are defaulting on their loan repayment. In such cases, the lending institution can sell the defaulter’s gold jewellery through public auction to cover the loan dues. More often than not, the borrower will be informed two weeks beforehand.
  • If the institution has any liability towards the borrower, it is refunded within one month of the sale of the gold. Whereas, if the auction of the gold jewellery falls short to clear the debt, the institution has the right to recover the remaining amount through legal proceedings against the borrower.
  • When borrowers come up short in terms of gold loan repayment, their credit scores get impacted. Such finance-related defaults get documented by the credit bureaus and make it difficult for them to get a loan henceforth.
  • Penal interest will be charged by the lender for the missing months of gold loan repayments ranging from 1% to 7% per annum.


Now that you are aware of the possible scenarios, here are some tips to follow to avoid the default on your gold loan EMI:

  • Using a gold loan EMI calculator will help borrowers in calculating loan repayments for taking care of monthly EMIs. This, in turn, will help them plan their finances better and save them from late EMI payments.
  • Choose long tenures to pay EMI in manageable amounts.
  • Opting for bullet payment allows borrowers to pay the full amount at the closure of the plan.
  • Always opt for pre-closure if the necessary finances are available.


With the convenience of availing gold loans comes the responsibility of repaying gold loan EMIs. That is why borrowers must make a sincere effort in this regard so that their credit score doesn’t get affected in the long term.

Muthoot Finance is India’s most trusted financial services company that offers a variety of gold loan schemes with low interest rates and easy loan repayment schedules. For more details about Muthoot gold loan payment or loan repayment online, visit our nearest branch.

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