Fixed vs Floating Interest Rates: Which is Better for Your EMI?
Updated · 6–8 minute read
Fixed vs Floating Interest Rates: Which is Better?
A fixed-rate loan keeps the rate constant for a period, so your EMI stays predictable. A floating (variable) rate changes with market conditions, so your EMI can move up or down.
Fixed Rate
- ✔ Predictable EMIs
- ✖ Usually higher initial rate
- ✖ Penalties for early prepayment in some cases
Floating Rate
- ✔ Potential savings if rates fall
- ✔ Often lower starting rate
- ✖ EMIs can increase when rates rise
How to Choose
- If you need stability, choose fixed.
- If you can handle fluctuations and expect falling rates, choose floating.
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