Some time we need loans from friends, family or financial institutions such as banks. These loans can be for investment purposes, school fees, fees for medical treatment, purchase houses, purchase of vehicles and other financing.
When we decide to use banking services in financing our needs, then one thing of our concern is the bank interest. Each bank offers loans with varied interest rates. Some offer fixed rate and the other offer floating rate. Each offer has its own advantages respectively.
In a system of floating rate bank usually offers low interest in a certain time, for example the first year, and then use the floating system. In this system there is no certainty in interest rates after the fixed rate period ends. When the economy is good and stable condition, usually it is advantageous for the borrower, while in an unstable economic situation this could be a boomerang for the lender.
The system of fixed interest payments due to better ensure the sustainability of debt repayments and interest are not affected by economic conditions. Although the interest rate offered is usually higher than the floating rate system but this is safer for borrowers.
Each option has risks respectively. In addition to the interest system, there is also the sharia system more friendly for the borrower, although not so popular in the community. Every person has the choice of each and all of them back on their personal.