Loans and Factors Affecting Them

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Loans and Factors Affecting Them

There are two types of loans.
Fixed and Floating
.For fixed type of loans the interest rate will be fixed for the entire period of repayment. However in case of unprecedented circumstances there might be an increase in interest rates.For the floating type loans the interest will carry a fixed component as well as a variable component .The variable component will depend on the prevailing prime lending rates. That for example the fixed portion might be 8%pa and it might vary by 0.2% points for every 1% point change in the prime lending rates. However the methods adopted to fix the variable portion might vary.