Can the lender sell the collateral if I default on the loan?

Yes, if you default on the loan, the lender may have the right to sell the collateral to recover the outstanding amount of the loan. This is typically outlined in the loan agreement, which specifies the conditions under which the lender can seize and sell the collateral. In India, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 provides for the enforcement of security interest by banks and other financial institutions. The Act enables lenders to recover their dues without the intervention of the court, subject to certain conditions. The lender has to follow the due process of law and give a notice to the borrower before proceeding with the sale of the collateral. The proceeds from the sale of the collateral will be used to repay the outstanding amount of the loan. If the sale of the collateral does not fully cover the outstanding debt, the borrower may still be liable to pay the remaining balance.