If you have taken loans previously or have some basic knowledge, you must have heard about interest rates. According to experts, when you are applying for a long, interest rate is the most important thing that you need to check.
There are two important types of interest rates in the market. These are fixed rates and floating interest rates. In this blog, we will look into the basics of these interest rates and some pros and cons of these interest rates. Try to read the full write-up to learn more about them in detail.
We are not expecting you to be an expert in loan matters. If you need any help, you can look for a DSA Partner with enough experience. These professionals are working in this segment day and night and are the best people to get help from. Having some idea about different interest rates can be helpful in many ways, especially in finding the right loan for your family. Keep reading to know more.
Benefits of Having a Fixed Interest Rate
As the name suggests, while you are applying for a loan, you can choose whether you want a fixed interest or a floating one. Most people love to choose fixed interest rates for a couple of reasons. Let’s see some of them here-
1. You Know How Much Money You Have to Return Right from The Start
If you have already chosen a fixed interest rate and the time you will take to repay your loan, you know exactly how much money you have to pay to the bank. It is important for people who are living their life by making calculations. Most people find it the easiest and prudent way to deal with loans, and there is nothing wrong with that.
2. You Don’t Need to Worry About Any Fluctuations in The Market
The only difference between floating and fixed rates is the market fluctuations. When you have opted for a fixed rate, you don’t need to worry much about what the market is doing. People with fixed incomes should always go for fixed interest rates.
3. Plan Your Financials
Do you love to make financial planning at the start of the year? You can easily do that if you choose fixed interest rates. Get an expert to learn more about the process.
Cons of Getting a Fixed Interest Rate
There are some cons as well-
1. Most Interest Rates Are Comparatively High
We have talked to financial experts, and according to most of them, when you choose a fixed interest rate, the banks try to offer you a higher rate of interest to be on the safe side.
2. You Can’t Save Much Money
As you are repaying more money as an interest payment, you can’t save much money in this way. Check ICICI Bank DSA Registration before getting a loan from them.
Why Do You Need to Consider Floating Interest Rates?
We have discussed fixed interest rates; now, we need to talk about floating interest rates.
1. Save Your Hard-Earned Money
When you choose a floating interest rate, you can save your hard-earned money by not giving more money as interest.
2. You will Get More Options
Choosing a floating rate of interest will give you much more options. You can negotiate with the bank later and crack a deal in your favor.
3. Interest Rates Are Comparatively Low
From experience, we can say that in most cases, the average interest rate is lower than fixed rates.
Cons of Floating Rates
Although there are a few benefits of having a floating interest rate, there are cons as well-
1. You Will Be in Uncertainty
When you choose variable interest rates, you are dependent on the market. Any change in the market will affect your payment options.
2. You May Pay More
In some cases, you have to pay more, and there is no one you can blame for this.
We have tried to give you an overview of fixed and variable interest rates. Now, it is up to you to choose the best deal possible. Don’t forget to get professional help if you need it.