Floating interest and reducing interest

[joyvictor]

I had taken sbi encash loan at the ROI 15.65% at reduced interest.I recently knew that there is no pre closure charges for the floating interest.
Floating interest and reducing interest are the same or different?
And does it applicable to this type of loan or HOME loan only?

 

[yusuf646]

Both are different concepts; you are merging the two.

Floating interest is a type of interest rate that may change in the future according to the RBI's repo rate.

Reducing interest is a method of calculating the interest. Usually, all loans are calculated using the reducing interest method.