Should You Opt For A Fixed Rate Or A Floating Rate On A Personal Loan?

 

When it comes to personal loans, you may be confused about whether to opt for a fixed rate or

a floating one. If you are unable to decide between fixed vs floating interest rates on personal

loans, then this short post can help you out! Read on!

What is a floating interest rate?

The floating interest rate is linked to an internal or external benchmark rate and differs accordingly. Hence, your EMI amount may vary as per the market conditions. And you may have to pay higher or lower EMIs. The benefit of the floating rate of interest is that it is affordable than fixed ones. The only thing that may be concerned here is that you may not be sure about the exact EMI amount payable over the loan term. Hence, it may make financial planning a bit tough. 

What is a fixed interest rate?

As the name suggests, in a fixed interest rate scenario, you need to pay interest at the same rate during the entire repayment period. The key benefit here is that the rates are unaffected by market conditions. Hence, by opting for the fixed rate of interest, you can calculate personal loan EMI amount and chalk out a repayment plan. 

But if you are confused between fixed vs floating interest rates, then you need to know that the fixed rate is likely to be higher than the floating one. If you don’t want to take the risk of rising interest rates during the tenure, then you can go for the fixed rate. 

Based on your affordability and income level, you should choose a rate type and avoid being confused between fixed vs floating interest rates. 

Bajaj Finserv presents pre-approved deals on personal loans and other financial products. It is to ease off the entire loan processing. 

You can explore pre-approved offers after sharing your primary credentials, like name and mobile number.   

Must Read: Everything You Should Know About Fixed Rate Or A Floating Rate On A Personal Loan