Fixed vs Floating Interest Rates for Used Car Loan (1)

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Fixed vs Floating Interest Rates for Used Car Loan
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What does fixed interest rate mean?
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• The interest rate and EMI remain fixed
  throughout the loan tenure.

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Fixed interest rate used car loan benefits
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• The interest rate remains constant regardless
  of market conditions.
• Borrowers are aware of their EMI and can thus
  efficiently manage their budget.

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Fixed interest rate used car loan drawbacks
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• Such loans bear a higher interest rate.
• Loan foreclosure attracts penalties.

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What does floating interest rate mean?
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• Interest rate changes with RBI's benchmark rate
  and market conditions.

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Floating interest rate used car loan benefits
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• Such loans bear a lower interest rate.
• There is no penalty for loan prepayment.

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Floating interest rate used car loan drawbacks
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• Since they are influenced by external factors,
  floating interest rates are uncontrollable.
• Changing EMIs makes it difficult for
  borrowers to manage their budget.

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• Key differences between floating and fixed
  interest rates

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Interest rate
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• Fixed interest rates are 1 to 2.5 higher than
  floating interest rates.

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Impacting factors
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• Fixed interest rates are determined by the
  borrower's profile.
• Floating interest rates are influenced by RBI's
  base rate.

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Monthly instalment
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• For fixed interest rate, EMI remains unchanged
  throughout the repayment tenure.
• For floating interest rate, EMI fluctuates.

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Budget management
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• Fixed-rate loans are easier to manage than
  floating-rate loans.

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• All in all, consider the benefits and drawbacks
  of both interest rates before taking a used car
  loan.

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Hero Fincorp Limited
09, Basant Lok, Vasant Vihar, New Delhi -
110057
Tel [phone]
Email corporate_at_herofincorp.com
Website https//www.herofincorp.com/
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Used Car Loan