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Guide for Online Gold Loan

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  • Fixed Vs. Jumping interest rate gold loan: Which one is better for you?
Fixed Vs. Jumping interest rate gold loan: Which one is better for you?
Fixed Vs. Jumping interest rate gold loan: Which one is better for you?

A gold loan is a great way to meet your urgent credit requirements. Whether you want to finance your education, raise working capital for your business, meet your household expenses or tackle a medical emergency – a gold loan is a way better option than a personal loan. Minimum documentation, quick disbursal, no requirement of an income proof or a strong credit history – all of these features add to the allure of a gold loan.

With a wide range of gold loan options available from different companies, it’s easy to get overwhelmed and miss the important details. But before you make a final decision, you need to understand the difference between a fixed and jumping interest rate gold loan.

What is a Fixed Interest Rate?

Once you get a gold loan from a gold loan company or a NBFC (Non-bank Financial Company), you are charged a particular rate of interest on the principal amount, which is paid in the form of an EMI (Equated Monthly Installment). In the case of a fixed rate gold loan, your interest rate remains constant for the entire loan repayment tenure.

How is a Jumping Interest Rate different?

In case of a jumping rate gold loan, if you fail to pay your EMI on the due date then you’re charged an extra rate of interest on the overdue amount. This increase in the rate of interest is known as a jumping rate. And if you’re not careful, then this jumping interest rate can end up costing you a lot!

Fixed Vs. Jumping Interest Rate

  • The interest amount of a fixed rate gold loan is usually 1% to 2.5% higher than a gold loan with a jumping interest rate.
  • Due to the fluctuating interest of jumping rate gold loans, there is a high degree of variation in the EMI amounts as compared to fixed rate gold loans
  • If you default on a jumping rate gold loan, you will end up paying much higher interest on a monthly basis.

Keep this in mind before you make a decision

Gold loans are becoming easier to procure day-by-day, with companies offering doorstep loans with attractive interest rates. But before you take your call, it’s very important to consider your current and future financial prospects. If you think that you’ll be able to maintain a stable and predictable cash flow in the coming future, then you can opt for a gold loan with a jumping interest rate. But if you have an unpredictable income and don’t mind paying a marginally extra interest, then you should opt for a relatively conservative and safer approach, i.e. a fixed interest gold loan.

About the Author


Vijay has 17+ years of experience in field sales & operations. He is an expert in setting up a sourcing & distribution network across the country. Vijay has been instrumental in establishing offline sourcing & fulfillment network for SahiBandhu in 24 States & 5 UTs in less than 3 years, covering 60% of the districts. Vijay is a seasoned Financial Inclusion professional having worked with institutions like Coromandel Infotech, FINO, and Manipal Business Solutions. Vijay is a post-graduate in computer science from Kurukshetra University.

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