Loan interest rates are determined by multiple factors including the RBI repo rate, the lender's cost of funds, borrower's credit profile, loan amount, tenure, and market conditions. This calculator helps you reverse-calculate the effective interest rate from your known EMI, loan amount, and tenure.
A fixed interest rate remains constant throughout the loan tenure, giving you predictable EMIs. A floating rate is linked to an external benchmark (like the RBI repo rate) and can change periodically. Floating rates are usually lower initially but carry the risk of increasing over time.
You can negotiate a lower rate by maintaining a high credit score (750+), showing stable income, opting for a shorter tenure, providing collateral, or transferring your loan to a lender offering better rates (balance transfer). Existing customers with good repayment history can also request a rate reduction.
For floating-rate loans linked to external benchmarks, changes in the RBI repo rate directly affect your interest rate. When the repo rate increases, your loan interest rate goes up (and vice versa). Banks must pass on repo rate changes within a defined period, typically resetting rates quarterly.