📈 Fixed vs. Floating Interest Rates
Understanding which interest rate type suits your financial goals
🔒
Fixed Rate
Interest rate remains constant throughout the loan tenure
Advantages
- • Predictable EMIs
- • Protected from rate increases
- • Easier budgeting
Disadvantages
- • Usually higher initial rate
- • Miss out on rate decreases
- • Higher overall cost possible
📊
Floating Rate
Interest rate changes based on market conditions
Advantages
- • Generally lower initial rates
- • Benefit from rate decreases
- • Often cheaper in long term
Disadvantages
- • Unpredictable EMIs
- • Risk of rate increases
- • Harder to budget
Real Example
Loan Details:
Loan Amount:
₹30,00,000
Tenure:
20 years
Fixed Rate (8.5%)EMI: ₹26,035
Floating Rate (Starting 8%)Initial EMI: ₹25,097
Which One Should You Choose?
Choose Fixed Rate if:
- You prefer stable, predictable payments
- Current rates are historically low
- You have a strict monthly budget
Choose Floating Rate if:
- You can handle payment fluctuations
- Current rates are high
- You expect rates to decrease