Fixed vs Floating Interest Rate: Which One to Choose?

Fixed Interest Rate

Rate remains constant throughout loan tenure regardless of market changes.

Pros: Predictable EMI, protection from rate hikes

Cons: Usually 1-2% higher, no benefit from rate drops

Floating Interest Rate

Rate changes based on market conditions linked to RBI repo rate or MCLR.

Pros: Lower initial rates, benefit from rate cuts

Cons: EMI uncertainty, risk of rate hikes