3 Missed Gold Loan EMIs? Your Jewellery Gets Auctioned

If you take a gold loan and miss EMIs, your pledged jewellery can be auctioned by the lender. Experts say the process can begin after just 3 missed payments. Here's exactly how it works and how to protect your gold.

Here's what happened: Gold loan lenders can initiate auction of pledged jewellery after a borrower misses multiple EMIs, typically 3 or more, as per the loan agreement terms.. Lenders are required to send a formal notice with auction date and details before selling pledged gold, but recovery timelines vary by institution and loan type.. If the auction proceeds exceed the outstanding loan amount and charges, the surplus must be returned to the borrower — a right most borrowers are unaware of..

What you should do: Call your gold loan lender immediately if you anticipate missing an EMI — request a repayment restructuring or one-time settlement before a default notice is triggered.. Check your loan agreement for the exact number of missed EMIs that trigger the auction clause and the notice period your lender must give you before auctioning.. Keep your registered address and mobile number updated with your lender so auction notices reach you in time and you can respond within the window allowed..

Pro tip: If your gold is auctioned and the sale price exceeds your dues, the lender is legally obligated to refund the difference — always ask for an auction settlement statement.

If you're considering settling a loan, our loan settlement guide walks through the process.