Floating Interest Rate
A floating interest rate is an interest rate that fluctuates over the tenure of a loan, typically adjusted every quarter based on factors like government interest rates, market conditions, and inflation. It is commonly applied to personal loans and home loans. The floating rate is usually calculated by adding a margin to a base rate, such as the Prime Lending Rate (PLR) or the Benchmark Prime Lending Rate (BPLR). As market conditions change, the floating rate may rise or fall, impacting the borrower's monthly payments. This type of interest rate offers flexibility but comes with potential variability in repayment amounts.
Related Terms
Index Arbitrage
Index arbitrage is a trading strategy that aims to generate returns by exploiting short-term price...
Equity Trading
Equity trading involves buying and selling equity shares in secondary markets, via stock exchanges. Traders...
Commodity Spread Straddle
A commodity straddle is an options trading strategy where a trader buys both a call...
Contingent Liabilities
A contingent liability is a potential obligation that may arise depending on the outcome of...
Equity Share Capital
Equity share capital refers to the total amount of money raised by a company through...
Differential Pricing
Differential pricing is a strategy where a product or service has varying prices based on...
