Why To Choose Floating Rate of Interest ?

If one has opted for a loan at floating rate of interest he / she needs to know about Floating Rate of Interest. Check out the most important point before opting the Floating Rate of Interest.

• The Base / Reference rate of the bank to which the floating rate of interest is linked;
• Whether the spread / margin can change during the tenure of the loan;
• Whether the agreement specifies a ‘minimum interest rate’ clause. (This would mean that even if the interest rate moves down you cannot benefit from it below the minimum rate specified by the bank);
• Whether the bank has pre-determined reset dates like January 1, April 1, July 1, October 1 etc.