Types of Interest Rate

There are two main interest rates in Apart Loan.

 

◆Fixed Interest Rate

Fixed rate is applied either for a certain period of time or whole time.

Fixed rate for a certain period will become floating rate after a few years past.

With the fixed interest rate, your loan repayment amount is set so it is easy to make a loan schedule.

It’s also favorable when interest rate is going up.  Once fixed rate period is over, your interest rate may change and become higher.

 

 

◆Floating Interest Rate

Floating interest rate changes in conjunction with short term prime interest rate twice a year.

Usually floating interest rate is set lower than fixed interest rate.

It is better when interest rate is going down but loan repayment amount and interests on loan are not determined.

 

 

Floating is the best when interest rate is about to drop and Fixed is the best when interest rate is about to rise.

Try to run a what-if analysis on your own situation and decide which one is the best for you.

 


Types of Interest Rate
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