I currently have a loan with an interest rate of 10.75% (MRR + 4.00%). How can I benefit from using an interest rate swap if I believe interest rates will decrease? Also, how do I enter into an interest rate swap—should I contact my bank or a different institution?
Without entering into interest-rate swaps,
Is this a floating-rate loan?
If yes,
then simply wait for…
a. …the interest-rate to fall
b. …and for the periodic recalculation of the variable-rate of your loan to be triggered
If no,
is this a personal loan on which you are paying EMIs?
Personal loans refers to loans given to individuals and consist of (a) consumer credit, (b) education loan, (c) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), and (d) loans given for investment in financial assets (shares, debentures, etc.).
if yes, then you may be eligible
to switch to a floating-rate loan
to avail the benefit of any reduced interest rates, in future.
Source: FAQs on the circular on ‘Reset of Floating Interest Rate on Equated Monthly Installments (EMI) based Personal Loans’ dated 10-JAN-2025.
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