• Muthoot Finance Logo
Quick Link

| July 29, 2022

Defaulted on your Gold Loan EMIs? Here are 5 Things You Should Do Now!

Gold Loan is aa secured loan that many leading banks and NBFCs provide to borrowers against their gold jewellery as security. Since this loan type has lenient eligibility criteria and conditions, borrowers with low credit scores and history can apply for it. Also, lenders provide a flexible repayment tenure, allowing customers to repay the loan amount without any trouble. However, when the amount is not paid for a long time, borrowers have to face some repercussions. In many cases, the bank also provides a grace period for the loan repayment, during which customers should pay the dues without fail. Following this period, the lenders may charge a certain amount as late fees. Remember, it would be taken as defaulting cases if borrowers miss the EMIs by the due date.

So, if you are willing to apply for a gold loan but concerned about what will happen if you do not make the gold loan repayment on time due to some unforeseen situations, here is what you should expect:

Constant Reminders

If you are repeatedly missing repayment, the bank will send a reminder via calls, emails, and messages. These regular reminders would prompt you to clear the dues.


The bank or lender can charge huge penalties for late payment of EMIs depending on the amount from the due date of the loan repayment.

Auction of the Gold

Despite regular reminders, if you overlook the consequences and are unable to pay the loan EMIs, the last option for the bank or NBFCs is to auction your gold to cover the dues. The lender will inform the borrower about the same and give them a few days of notice. If the sale proceeds are lower, banks can take the help of legal proceedings to recover their amount.

Reduced Credit Score

While you apply for a gold loan, the credit score has nothing to do with the loan approval. However, non-repayment of loans would impact your credit score. The lender will notify the credit bureaus about the same and the credit bureaus to other banks and lenders. It will affect your credit score, making it difficult for you to apply for a loan in the future. And even if you get the loan, the interest rate would be higher.

Things To Do If You Have Defaulted?

Due to unexpected circumstances, if you have defaulted on your gold loan EMIs, here’s what you should do now.

Keep Calm

You should avoid being stressed and try to find out the causes why you are not able to repay the loan EMIs. Then, think about the ways you can pay the current loan amount and avoid this situation in the future.

Talk to your Lender 

Communication is the key to many problems. So, if you expect issues regarding the loan repayment schedule, talk to your lender and explain the reasons for the default. There might be some options, and the lender may give you a solution that works for you both. You can ask for more time to pay the gold loan EMI or request to reduce the EMI, but it will increase the loan tenure.

Be Aware of the Rights of Defaulters

banks and NBFCs are governed by RBI, and so they need to follow the rules and fair practices. You must know that defaulters also have certain rights. According to the rules, the banks or the loan recovery agents assigned by the lender cannot threaten the customer.

Prioritize Your Payments

You should not take the loan repayment tenure lightly and try your best to repay the amount before or on the due date to avoid issues. If there are financial issues, it is wise to think about increasing your income and reducing expenses. You can take part-time jobs, freelance projects, or short-term jobs to make more money. In addition, you should make a proper budget for your monthly expenses and spend accordingly.

Loan Settlement 

Sometimes, lenders provide an option of loan settlement where borrowers pay a portion of the loan amount. While it can be a big relief for borrowers, it can affect their credit score. So, one should go for this option in the worst case.

Ways to Make Gold Loan Repayment

When applying for a gold loan, one must be cautious about the repayment of the loan amount on time. They should know how loan repayment can affect the chances of getting financial aid in the future.

Here are some smart ways to repay the loan amount before the due date and avoid defaults.

  • Always use a gold loan EMI calculator to calculate monthly EMIs and plan accordingly.
  • Increase your loan tenure to pay affordable EMIs.
  • Repay the principal and interest amount equally every month
  • You can choose bullet payment which will allow you to pay the whole amount at the end of the repayment plan.
  • Pay off the interest first.
  • Look for pre-closure options at the time when you have enough mone


Muthoot Finance is one of the most reputed financial institutions offering gold loans with many customer-centric schemes. The company provides borrowers with the ease to opt for a gold loan with low-interest rates and an easy loan repayment schedule. For more information about the gold loan payment at Muthoot Finance, visit your nearest branch.

Enquire Now!




Subscribe to our newsletter

help us serve you better

Close Icon