How will interest rate fluctuation affect the loan?

Interest rate fluctuation can have an impact on the loan in different ways. If the interest rate goes up, the borrower may have to pay a higher interest rate on their loan, which can increase their monthly payments and the overall cost of the loan. On the other hand, if the interest rate goes down, the borrower may have the opportunity to refinance their loan at a lower interest rate, which can reduce their monthly payments and the overall cost of the loan.

If the loan has a fixed interest rate, the borrower's interest rate and monthly payments will remain the same throughout the loan term, regardless of interest rate fluctuations. However, if the loan has a variable interest rate, the interest rate and monthly payments can fluctuate based on changes in the market interest rate.

It's important for borrowers to consider interest rate fluctuation when taking out a loan and to choose a loan with an interest rate that they can comfortably afford even if interest rates rise in the future.