The needs and wants of diverse consumers and different tastes are sometimes difficult to meet due to financial constraints. There are not many among consumers who can afford to buy a vehicle or house that reaches hundreds of thousands to millions of ringgit in cash. The solution to this situation is to take a loan whether it is a personal loan, car rental, education, housing including credit cards.
There are various loan facilities offered by financial institutions in this country to make it easier for users to have what they want and fulfill what they have been hoping for. As borrowers, we should know the rates and duration of the offers given in detail and not just be interested in the interest rate. beginning Sometimes, the interest rate charged will increase in the future even if the initial interest rate seems low.
We should make sure whether the loan rate is a flat rate or a variable rate.
There are 2 types of rates:
1) Floating Profit Rate
Floating rate interest is calculated based on the current loan balance with the interest rate based on the base rate and this rate can change throughout the loan period in the following year. Changes in interest payable can affect 2 things:
- Increase in monthly payment amount.
- Increase in loan repayment period.
2) Fixed Profit Rate
Fixed rate is the interest calculated based on the current loan balance at the same interest rate which does not change throughout the loan period and the borrower knows exactly how much amount needs to be paid in installments every month. This is best suited for borrowers who do not want any surprises in their monthly commitment.
In general, interest rates are lower in bad times and higher in good times. The most common option taken by borrowers today is the Floating Rate Loan due to the cheaper interest rates at current levels compared to the Fixed Rate packages available today. But if you’re looking for something predictable, then a Fixed Rate package might suit you better. At Koperasi Kowaja, we offer fixed rates that are profitable to members because monthly payments are always paid in the same amount until the end of the payment.