Interest rates best suited An important factor that goes into your EMI calculations is the interest rates, which may vary from bank to bank, so do compare them. Also do a complete and detailed analysis of the various options like the interest rates i.e. fixed and floating rate of interest.

Thirdly, if two banks give you the same amount of loan but at different interest rates do your math and work out what's best for you.

Fixed interest loans charge an interest, which remains the same through out the tenure of the loan. This means that the consumer is immune to market risk or the possible upward movement in the interest rates.

Hence, fixed rate is a good option when the interest rates are expected to move up in the future.

As for floating rate loan, a consumer is exposed to market risk and his gain or loss depends on the interest rate condition prevailing in the market. Floating rate is beneficial if the interest rate falls in the future. A floating rate is considered non-transparent and is also known as 'adjustable rate'.

Fourthly, if you decide to opt for a fixed rate loan, you can still switch to a floating rate loan in the future and vice versa as and when rates go in your favour and if you do decide to switch, you should take into account the cost of doing so and the interest rate benefits of switching.

For a given interest rate, loan with a daily or monthly reducing balance is better than an annual reducing balance loan. Interest rates vary depending on the tenure of the loan, the amount of the loan and your personal profile.