What Kind Of Interest Rates Are Offered In Personal Loan?

Personal loan offers three types of interest rates; those are fixed rate, floating rate, and flat rate.

1. Fixed rate personal loan: The fixed rate personal loan helps the barrower to know exactly when the loan will be paid off and the exact monthly payment for the entire term of the loan. The advantage of fixed rate is once the rate is set it never changes.
2. Floating rate personal loan: Flexibility is the main advantage of floating interest rate. It offers for making additional payment. In floating rates, you can make large payments at a time or you can repay the total loan at any time. The interest rates, and repayments can increase or decrease based on market conditions. There is a chance to convert the floating rate loan to a fixed rate loan at any time.
3. Flat rate personal loan: In flat interest loan, the loan will be paid back with interest at the end of specified number of periods. The future value of interest rate is calculated by one formula i.e., D = L (1+ (i*N)], where D = the amount of money due at the completion of the loan, L = the amount of money loaned, i = the interest rate per period, and N is the total number of periods.

The interest of a personal loan is decided based on the credit repayment capability and credit history.