Fixed & Variable Loans : Comparison

When it comes to mortgages, there are two main types, fixed and variable. Both have their own unique benefits and drawbacks, so it’s important to understand the differences before you decide which is right for you. In this useful clear credit article, we will explore the difference between the two!

There are many factors to consider when choosing a personal loan, and it can be overwhelming. However, one of the most pressing concerns is whether to go with a fixed or variable interest rate.

Although you can choose between a fixed and variable rate depending on the loan, it’s essential to consider the differences before deciding which personal loan is best for you.

A fixed interest rate is a loan where the monthly payments stay the same.

A fixed interest rate personal loan is a secure way to borrow money – you’ll know exactly how much you need to repay, and your payments won’t change over the life of the loan. You also don’t have to worry about future increases in interest rates.

However, you’ll miss out on possible rate reductions.

If you have the opportunity to make lump sum payments or additional payments to settle your loan early, remember that lenders often charge a fee or penalty for this action. These extra costs could cancel out any potential savings, so be sure to weigh all options before making a decision.

Compared to fixed interest loans, variable rate personal loans offer more flexibility. For instance, you might be able to get longer repayment terms and the option of paying off the loan early without any charges.

If some lenders permit it, borrowers may be able to access extra money they have already paid on their loan. Be conscious that there might be limitations placed on the amount you can withdraw and additionally, withdrawing could come with additional fees.

Just because a loan works for other people, doesn’t mean that it will work best for you. If you’re undecided between opting for a variable or fixed rate personal loan, your next step might be to contact a financial advisor and explore the various options available.

Understanding the difference between variable and fixed loans is important when making the decision on which type of loan is best for you. If you’re struggling with bad credit, don’t hesitate to reach out to Clear Credit Solutions. We offer a free credit file assessment to help you see what we can do for you. With our expertise in credit repair, we can help get your finances back on track.