Financial literacy and more
Every loan agreement that has a floating rate of interest has a reset period which is the time when changes will occur to the interest rate on the loan.
The benchmark rate determining the floating rate might change at any point.
This does not mean that the change is applicable from the next day to the individual borrower.
For a particular borrower the rest period is when the changes will be reflected.
A reset period could be every quarter or even half yearly or annually.
A floating rate of interest changes with the change in interest rates in the economy.
This means that there is not going to be a fixed rate over the entire duration of the loan.
The interest rates could go either up or down depending on the economic conditions.
The floating rate would change at a specific interval that is decided in the loan agreement.
This rate of interest can lower or raise the amount to be repaid making planning tougher for an individual.