ROBOR, IRCC and variable interest — explained simply
Why can a loan installment rise or fall over time? What are these mysterious indices in the contract? A simple explanation, with examples.
When you take a loan, the interest can be fixed (stays the same for the whole period) or variable (changes over time). The variable one is made of two parts: a market index + a fixed bank margin. The index is what moves.
What ROBOR and IRCC are
In Romania, the index was long ROBOR (the rate at which banks lend to each other), and now new loans use IRCC. When these indices rise, your installment rises; when they fall, it falls too. That's why two people with the same loan can pay different installments in different years.
Test it risk-free
In Kosron Bank you can simulate a loan and see how the installment and total cost change. You understand the difference between fixed and variable before you ever sign a real contract — exactly the purpose of an educational game.
