What are types of interest rates?

Question

Accepted Answer

Types of interest rates include fixed, variable, prime, and LIBOR.

Fixed interest rates remain the same throughout the loan term.
Variable interest rates fluctuate based on market conditions.
Prime interest rates are the rates offered by banks to their most creditworthy customers.
LIBOR (London Interbank Offered Rate) is the average interest rate at which major global banks borrow from one another.

Accepted Answer

There are generally 3 types of interest rate first one is variable home loan interest rate, where the interest rate fluctuates according to the bank interest rate. There are few advantages and disadvantages where on of the most pro is that when the rate fixed by bank decreases the rate of interest for home loan also decreases. And at the same time if rate increases the interest we pay will also increase.
Second type is of fixed rate of interest where it is only for certain period for 1 to 5 years where the rate of interest in fixed and it automatically changes to variable rate of interest after the stipulated period un till any new rate is fixed. This helps the borrower to pay a fixed interest rate during initial period. Once fixed rate is set for certain period he cannot change it to variable rate of interest unless you pay break up cost to the bank.
Third one is spilt loan which helps the borrower to split loan into fixed and also variable rate of interest in which he enjoys best of both the worlds.

What are types of interest rates?

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