Loan on Floating Interest Rate and Fixed Interest Rate Difference
Impact of RBI Policy on Floating Loans
Floating interest rates are directly influenced by RBI’s repo rate. When the RBI lowers rates to stimulate growth, your EMI may reduce. But in times of inflation, when rates are hiked to control money flow, your EMI may shoot up.
Conclusion
Both fixed and floating interest rate loans come with their own benefits and limitations. Your decision should depend on:
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Your income stability,
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Loan tenure,
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Market trends, and
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Your comfort with risk.
In general:
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Go for fixed interest rates if you value stability.
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Opt for floating rates if you’re optimistic about future rate cuts and want to save in the long run.
Understanding these differences empowers you to choose the best loan structure and avoid financial stress.
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