Fixed vs. Floating Interest Rate

A fixed rate offers payment predictability - your EMI doesn't change regardless of what happens to broader interest rates - but "fixed" sometimes only applies for an initial period before reverting to floating, so it's worth confirming the actual duration. A floating rate moves with a benchmark (commonly linked to the RBI's repo rate through a bank's own external benchmark rate), meaning your EMI or tenure can change over the loan's life as that benchmark moves. Floating-rate loans to individuals for non-business purposes currently carry a real advantage: RBI prohibits foreclosure/prepayment charges on them, a protection fixed-rate loans don't automatically get - see our foreclosure charges glossary entry.