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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.

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