Here the interest rate on the loan depending on the Prime Lending Rate (PLR) fixed by the Reserve Bank. This change can happen as frequently as one in six months. If the PLR falls, you benefit and if it rises... However, in case of a fall your payments remain the same for every month. The finance company will refund some of your EMI cheques and effectively compensate you by reducing the tenure of the loan. The reverse happens if the PLR rises, much to your disadvantage. Whoever said that this is a floating rate has got be joking. It's best called the sink or ride the crest rate, wouldn't you agree

A rate that is adjusted periodically to a premium over the equivalent yield of an index such as the prime rate or three-month Treasury bill rate.

The interest rate to be adjustable with the change of interest rates in future over the loan period