For those who are interested in investments with fixed interest rates, it is important to be aware of the pros and cons of fixed interest rates as opposed to variable interest rates.
Before we delve on differences, it is important to note that the fixed interest rate benefits hugely differ from variable / floating interest market rates, depending on the current scenario in the finance sector.
For those who wish to apply for loans with fixed interest rates in India, the perks may also be accompanied with the following disadvantages:
- An increased rate of interest that may range from 1-2.5%
- A lost opportunity on reaping the benefits of the market, should the interest rates take a dip
- The possibility of an unexpected financial imbalance owing to possible fluctuations in the time period. Banks and other financial organizations mostly abide by their individual norms when it comes to securing the fixed interest rate benefits pertaining to the loan. They may choose to do so either for some definite number of years or the entire tenure. Hence, prospective loan seekers are continually encouraged to read through, understand and abide by the guidelines offered by their respective creditor pre and post their loan arrangements.
So why should you choose fixed interest rate benefits over the variable counterpart?
- Stability of your finances, and
- Minimizing the risk of exposing your funds to the fluctuating market.
Consequentially, those interested in seeking loans with fixed interest rates in India, may also avail the benefits of some of the lucrative schemes offered by various banks and other financial institutions in India.
Owing to the competitive nature of the market, some schemes are currently available at a fixed interest rate of 10.1%. The duration of such schemes may vary as per the norms of the creditor, and currently extends to up to 10 years.
Fixed interest rate benefits are mostly reaped by those who wish to secure the pattern of their payment methods over a longer course of time.
Most potential debtors seeking common long-term loans like home loans, find a fixed home loan interest rate to be a significant part of their individual financial plan.
The ease of predicting the expenditure not for the present, but also for the future, is aided by various tools in the market. Most banks and financial institutions that offer home loans on a fixed interest rate prefer to enhance their services with tools like fixed home loan interest rate calculator; mostly made easily accessible on their respective websites.
Read Carefully and Choose Wisely!
For interested credit seekers who are on the look-out for limited changes in their financial status over a preferred period of time, the fixed rate interest benefits may-
- Help them chart out long term plans with continual assurance of a fixed financial environment.
- Secure their present and future financial status from the negative implications of any possible increases in the rate of interest in the market.
However, they must remember to be aware of all other possible alternatives, as the limited number of uncertainties that are accompanied with fixed rate interest benefits may significantly affect their finances and desired financial status.
The finance sector has grown exponentially despite some major setbacks that affected many economies. And coupled with technological advances, it was no longer a tough ordeal to document current scenarios and future predictions, in order to aid the study of the financial market.
Hence, it now becomes easier for the potential debtor to dig deeper into the nuances of his/her respective economy before implementing any financial decision, be it in accordance to fixed rate interest benefits in the present or the potential scope of it in the future.
Know More about : Floating interest rates vs fixed interest rates